In the beginning, TikTok paid labels a flat fee to license music for use in users’ videos. Now TikTok is massive...with over 1B+ users, it earned $4B in revenue in 2021 and is on track to earn $12B in 2022.
Now, Universal Music Group, Sony Music Entertainment, and Warner Music Group which, combined, hold 70%+ of market share want TikTok to fork over more in advertising revenue and royalties.
TikTok is a huge music marketer, surfacing new talent, 75% of US TikTok users find new music there, and promoting artists.
Songs can also go viral, like Megan Thee Stallion’s “Savage,” used in 24m+ videos. But, due to that flat fee, they don’t generate extra revenue.
One exec says TikTok should be paying 2x-10x more, based on similar agreements with other platforms, per Bloomberg.
For example, YouTube paid the music industry $6B+ between July 2021 and June 2022.
TikTok argues it shouldn’t have to pay the same as music platforms ‘cause it isn’t one. Or is it?
TikTok parent company ByteDance has a music streamer, called Resso, in Indonesia, Brazil, and India with plans to expand.
It recently registered a trademark for a “TikTok Music” app.
Its SoundOn feature allows artists to upload and earn royalties on their music.
It’s hiring people to sign and develop new artists.
TikTok and the labels will likely come to an agreement, or at least an extension, before contracts expire in a few months. But TikTok may ultimately end up on top. (Read more on The Hustle)