LABELS VS. TIKTOK: PREPARE FOR A BATTLE

TikTok has seen its revenue skyrocket over the last 12 months and the major music companies, keenly aware that the growth is from the content they supply, want their share. With contracts expiring soon, Bloomberg reports, Universal, Sony and Warner are looking for significant payouts without any public spats.

It’s estimated that TikTok will pull in $12b in 2022, up from $4b last year. Yet, among other issues, no matter how many times a song is played on the platform, the payout to the label remains the same. One exec who spoke with Bloomberg said TikTok “should be paying between two and 10 times more than its existing agreement, based on similar relationships with other platforms with large audiences such as Facebook and YouTube.”

TikTok’s argument is that it’s a promotional tool, not a streaming service like Spotify.

Sony, Warner and Universal struck their current deals between November 2020 and February 2021, when TikTok was just starting to branch out into advertising and grow out of its roots as a home for lip-synch videos. If nothing else, the music companies want a cut of the ad sales.

The Bloomberg story noted how pressure from the labels got YouTube to alter its model and how that's resulted in significant increases in payouts to rightsholders. Since it's Chinese-owned, however, TikTok will prove a trickier proposition. Remember when it was about to be banned from the U.S.? Its parent company, ByteDance, launched a streaming service in three countries that's struggling to attract paying customers and strike deals with all the majors, so the idea of ByteDance creating a competitor to Spotify and Apple Music seems far-fetched.

That hasn't prevented the label chiefs from lacing up their gloves. UMG ruler Sir Lucian Grainge addressed the TikTok situation on a call with investors last month: “We will fight and determine how our artists get paid. I’ve seen this movie before, and I know the ending.”