State Champ Radio licensing
When 21-year-old singer ericdoa released the song “ >one” last March, he had an unusual collaborator: Valorant. That’s not another artist; it’s a popular shooter game that attracted millions of players in February. Riot Games, the company behind Valorant, used “ >one” — which references the game in its lyrics — in a trailer that introduced a playable character named Gekko. The track is now ericdoa’s second-most-popular song on Spotify, with over 36 million streams.
“That was a huge spiritual win,” says Maria Egan, global head of music and events for Riot Games. “Can we do that over and over again?” she asks. “How do we unlock our platform and other gaming platforms to be the new place that new artists can find audiences?”
It’s a question often asked in the music business as well. In recent years, the industry has struggled to find reliable ways to ensure that its songs reach a wide listenership. The gaming community is massive, youthful and interested in music — in other words, an ideal target for labels. Yet there have been few notable recent instances of games helping new artists break through or driving music discovery on a mass scale.
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“Like music, gaming is global and has significant cultural relevance, but scalability at this intersection is still a challenge,” says Geoff Sawyer, an agent in gaming and esports at UTA. “Players and revenue are scattered across an endless web of product categories and consumer affinities, and not all in one big bucket. While there are incredibly cool, bespoke integrations happening between games and musicians, the music industry would need to upend its licensing model to truly achieve scale in this category.”
In truth, gaming does not need more labels’ music to thrive — the gaming industry earned around $184 billion in 2023, dwarfing music (around $26 billion, according to the IFPI). As one prominent music tech executive puts it, “the business model for games doesn’t need to support music.”
And even within the popular games that foreground music, space remains highly competitive. “There are still a limited amount of slots in FC, a limited amount of slots in NBA 2K,” says Steve Schnur, president of music for Electronic Arts (EA).
The music industry would presumably benefit if there were more games with more slots for its songs. But gaming executives say the opaque licensing system makes this unlikely. “Every time I speak to a games publisher, they’ve always got at least one horror story about trying to navigate music rights,” says Ben Sumner, managing director at Feel for Music, which helps games and brands with music supervision.
One recording may have multiple master owners and writers, each of which could work with a different publishing company, and gaming companies have to get everyone’s approval. Vickie Nauman, who has licensed music for many games in addition to founding the music-tech consultancy CrossBorderWorks, once had to get 143 agreements complete to clear 20 songs.
This may simply take too long for a game’s timeline, explains Gavin Johnson, director of sync and partnerships at the electronic music label Monstercat. “Typically a game developer is creating content that’s quarterly or bi-weekly or even weekly,” he says, especially in the world of “live services games,” which are free to play and dynamic, updated on the fly to rejuvenate player interest and maintain consistent engagement. (Several of the most popular games of 2023 — as measured by monthly active users — were live service games, including Call of Duty: Modern Warfare and Minecraft.)
In addition, the music industry usually requires large upfront payments to license songs. “Incorporating music is often an experiment for games, and they don’t want to pay millions of dollars for an experiment,” says Alex Tarrand, co-founder and COO of STYNGR, a company that offers games precleared music.
Between multiple rights holders impacting timelines and steep up-front fees, many game developers find it far easier and more fiscally prudent to commission music in-house. “If anything creates more cost in ways that aren’t really driving what a game is going after, they tend to think, ‘We probably shouldn’t be spending time and resources on that,’” gaming consultant Toa Dunn says.
Tarrand’s company STYNGR is working to reduce the friction between gaming and music companies by putting blanket licenses in place with all the major labels and publishers so game developers can come to STYNGR and pull music into their titles. Instead of paying STYNGR upfront, developers cut revenue-sharing deals.
Another company, Game Over, takes a very different approach, targeting gamers who watch live-streams on Twitch or enjoy gameplay montage videos on YouTube or Instagram. This allows them to sidestep the industry “arm-wrestling match” around rights altogether, according to partner Zach Katz. Labels are “still in the mindset that winning in the gaming space is tied to interacting with the [gaming] platforms,” Katz says. In his view, that’s “a mistake.” “The victory is ultimately to get the gaming audiences” and serve them music, which can be done in other places where gamers congregate.
Still, executives in both music and gaming dream of more in-game opportunities. “Licensing needs to be made easier and more scalable for games so that it’s not only huge franchises that can do it,” says BandLab CEO Meng Ru Kuok.
“What I’m hoping to do is create a dialogue where we can understand that, although synch relationships bear enormous amount of fruit, they still are limiting us,” Schnur adds. “Let’s take a look at what the term ‘synch’ means and what it should mean going forward.” He acknowledges, however, that music rights holders may be content with the current system — and wary that any calls for change could disguise a campaign to undervalue music.
For now, many creative ideas to bring more music into gaming “are just not coming to market,” Nauman says, “because of rights issues.”
Former Black Sabbath frontman Ozzy Osbourne called out Kanye West on social media on Friday (Feb. 9), saying that West had asked to sample a song but was “refused permission because he is an antisemite,” and used the sample anyway at a listening event for his new album at the United Center in Chicago on Thursday. “I want no association with this man!” Osbourne wrote.
Although Osbourne said online that West asked to sample “War Pigs,” the song he seems to have used is “Iron Man” – specifically a version performed by Ozzy Osbourne’s solo band at the 1983 Us Festival.
“We get so many requests for these songs,” his wife and manager Sharon Osbourne tells Billboard, “and when we saw that request, we just said no way.” Without permission, West would be unable to release a new song that used the sample. “We’ve been in touch with his team” about the legal issue,” says Sharon Osbourne. “And it’s also an issue of having respect for another artist.”
Starting in 2022, West, now known simply as Ye, made a series of antisemitic comments, for which he was widely condemned, and lost numerous sponsorship and fashion deals. Although he offered an online apology for his statements in December, the first song from his forthcoming album, Vultures, includes the lyric “How am I antisemitic? / I just fucked a Jewish bitch.” Although West does not seem to have finalized release details for the album – and Ozzy Osbourne’s comments suggest he may face issues clearing samples – he has held a number of listening events to promote it.
Ozzy Osbourne often allows other artists to sample his work. “But the simple thing is, we don’t want to be associated with a hater,” says Sharon Osbourne, who was raised Jewish. (Her father, the U.K. music manager Don Arden, was Jewish.) “To spread hate the way he does, it shouldn’t be allowed. All the excuses – he’s bipolar or whatever – doesn’t change that. It’s like, fuck you, basically.”
Like many early Black Sabbath songs, “Iron Man” was written by the band – Osbourne, Tony Iommi, Geezer Butler and Bill Ward. Who has the rights to license interpolations of a composition by more than one songwriter can depend on the agreement between them. In this case, Sharon Osbourne tells Billboard that the agreement says all four songwriters need to agree. There could also be permissions issues with the 1983 performance recording, to which Ozzy Ozbourne presumably has the rights.
Coincidentally, Ozzy and Sharon Osbourne dressed up as Kanye West and Bianca Censori for Halloween, but that was “a joke,” Sharon Osbourne said.
Universal Music Group (UMG), the world’s largest music company, released an open letter to its artists and songwriters on Tuesday (Jan. 30) stating that the company’s music would soon leave TikTok due to disagreements over compensation, artificial intelligence, infringing works and harassment. TikTok replied a few hours later, calling UMG’s letter a “false narrative” and […]
With Universal Music Group‘s catalog now being slowly removed from TikTok, the music company issued a new statement Thursday (Feb. 1) commenting on what it says are TikTok’s “woefully outdated” views on music licensing and compensation. Explore Explore See latest videos, charts and news See latest videos, charts and news The stalemate between the world’s […]
BERLIN — SUISA Digital Licensing is suing Twitter International in Munich District Court for copyright infringement on X, the online platform formerly known as Twitter. The suit alleges that music compositions controlled by SUISA Digital are found on the platform, and that the company has made no effort to license them or act promptly to remove the infringing content.
“SUISA Digital is using all of the resources at its disposal to defend the interests of authors and publishers it represents,” said SUISA Digital CEO Fabian Niggemeier in a press release about the lawsuit. “This is the only way we can effectively represent the interests of authors and publishers and ensure that they are compensated fairly by Twitter International.”
Rights to the songs in question, many of which were found in full videos on X, are represented by SUISA Digital, a subsidiary of SUISA, the Swiss collecting society. (SUISA Digital represents both public performance rights and mechanical rights for the works in question.) SUISA Digital says that it has tried to get in touch with X/Twitter in order to negotiate licensing arrangements, but it has yet to receive a serious response.
SUISA Digital also works closely with the U.S. performing rights society SESAC, as partners in their joint venture MINT. “SUISA Digital has our full backing in its lawsuit against Twitter International,” said SESAC International president Alexander Wolf in the press release.
Although SUISA Digital is officially based in Switzerland and Liechtenstein, the organization filed the lawsuit in Munich, since it’s part of a larger market, as well as one that has traditionally been friendly to copyright.
This isn’t the only music infringement lawsuit against X/Twitter. In June, dozens of music publishers sued the company for similar behavior. But there are several important differences between the two cases. In the U.S., X operates under the Digital Millennium Copyright Act, which offers online platforms “safe harbor” for infringement committed by their users, as long as they act to remove unauthorized content. (The publishers’ suit alleges that the company didn’t do that, or have a policy to ban repeat infringers.)
In Germany, the equivalent law falls under the European Copyright Directive, which is broadly similar but requires platforms to make efforts to license content – which the SESAC lawsuit alleges that Twitter did not do.
The other difference is damages. While the music publishers’ suit could be worth as much as $255 million, although that’s a maximum based on statutory damages, in Germany the case would have to establish damages based on the value of the licenses Twitter needed but did not get. Presumably, the idea behind this lawsuit is to force the Elon Musk-led company to enter into serious licensing negotiations.
Warner Music Group and TikTok struck a multi-year licensing deal allowing creators on the short-form video app to use WMG music on Tuesday, marking the first publicly announced deal between a major music company since the popular social media platform since licensing renegotiations began about 18 months ago.
The companies said in a joint statement that the multi-platform agreement licenses the full repertoire of Warner Recorded Music and Warner Chappell Music to TikTok, TikTok Music, CapCut, and TikTok’s Commercial Music Library.
It is the first sizeable deal struck since WMG’s Chief Executive Officer Robert Kyncl took over in January, and it marks the cooling of what has at times been tough negotiations between TikTok and the music industry establishment.
Kyncl and TikTok’s chief execurtive Shou Chew said the agreement would benefit artists.
“We are very excited to partner with Warner Music Group to create a shared vision for the future in which artists, songwriters, music fans and the industry can all benefit from the power of discovery on TikTok platforms,” Chew said.
While terms of the deal were not disclosed, Kyncl described the deal as an “expanded and significantly improved partnership for both companies. We can jointly deliver greater value to WMG’s artists and songwriters and TikTok’s users.”
TikTok has been engaged in ongoing negotiations for roughly the last year over remuneration to the 100-plus rights holders through whom it must license music played on its app. Billboard reported that TikTok had struck short-term licensing deals in 2020 with most major music companies–shorter than the 18-24-month licenses common between the music and tech industries–to use 30-second clips of songs.
But negotiations to reach more permanent agreements had been fraught, with the music industry pushing for greater incentives for rights holders and TikTok exploring what music was really worth on its platform.
Kyncl’s WMG being the first to announce it struck an agreement with TikTok comes after he signaled a friendlier tone during comments he made at a banking conference in March. Kyncl expressed empathy for executives at TikTok at the Morgan Stanley conference, who he said are at “a company that’s kind of embattled today with lots of different institutions around the world.”
“That’s all I look for, fair setup on both sides and to grow a business together,” Kyncl said in March.
The National Music Publishers’ Association says its members are suing Twitter over allegations of widespread copyright infringement and seeking hundreds of millions in damages, telling the Elon Musk-owned site it can no longer “refuse to pay songwriters and music publishers.”
In the lawsuit, which the group plans to announce during its annual meeting Wednesday (June 14), dozens of music publishers allege that Twitter had infringed more than 1,700 different songs — a claim that, if proven, could put the social media giant on the hook for as much as $255 million in damages.
“Twitter profits handsomely from its infringement of publishers’ repertoires of musical compositions,” the music companies write in their complaint, which was obtained by Billboard. “Twitter’s unlawful conduct has caused and continues to cause substantial and irreparable harm to Publishers, their songwriter clients, and the entire music ecosystem.”
Twitter did not respond to immediate request for comment.
The plaintiffs named in the lawsuit, set to be filed in Tennessee federal court, include Concord, UMPG, peermusic, ABKCO Music, Anthem Entertainment, Big Machine Music, BMG Rights Management, Hipgnosis Songs Group, Kobalt Music Publishing America, Mayimba Music, Reservoir Media Management, Sony Music Publishing, Spirit Music Group, The Royalty Network, Ultra Music Publishing, Warner Chappell Music, and Wixen Music Publishing.
The announcement that the NMPA would be pursuing legal action against Twitter shouldn’t come as a total surprise. In a February speech at the Association of Independent Music Publishers (AIMP) summit, NMPA president and CEO David Israelite called Twitter his “top legal focus” this year. He warned that the company was “hiding behind” the Digital Millenium Copyright Act – the federal law that limits how websites like Twitter can be sued over copyright infringement by their users.
In a statement on Wednesday, Israelite echoed that threat, saying that Twitter could no longer “hide behind the DMCA and refuse to pay songwriters and music publishers.”
“Twitter stands alone as the largest social media platform that has completely refused to license the millions of songs on its service,” Israelite said in a statement. “Twitter knows full well that music is leaked, launched, and streamed by billions of people every day on its platform.”
The DMCA provides websites like Twitter with a legal immunity — a “safe harbor” — against copyright lawsuits over material uploaded by their users, so long as they promptly remove infringing content and ban repeated violators from the platform. But in their new lawsuit, the publishers allege that Twitter failed to do either, meaning the site has legally forfeited the DMCA’s protections.
“Twitter routinely ignores known repeat infringers and known infringements, refusing to take simple steps that are available to Twitter to stop these specific instances of infringement of which it is aware,” the publishers wrote.
The NMPA annual meeting each year is known to feature at least one bombshell announcement from Israelite. Last year, the NMPA launched a legal action against over a hundred different apps that skim music from digital services without obtaining licenses, sent cease and desist notices to Apple and Google app stores, and filed a copyright infringement lawsuit against music video-making app Vinkle. In 2021, Israelite announced $200 million copyright infringement lawsuit against Roblox for hosting thousands of unlicensed songs within the game’s library.
The NMPA’s public grievances with Twitter date back to at least April 2021, when a Billboard published a guest column, co-penned by Israelite and RIAA chief Mitch Glazier. In it, the two leaders called for social media platform to license music and noted that in the last year music creators had sent more than 2 million notices to Twitter of unlicensed and infringing appearances of copyrighted music on the platform, more than 200,000 of which were of unreleased songs. “The company’s response to date has been totally inadequate,” the article lamented. It went on to suggest three ways for Twitter to address the grievances the music business has had with its operations: “licensing music and pay music creators like others do,” “better content protection tools,” and “stop demanding exorbitant payments from creators for content protection.”
Since Jack Dorsey stepped down from Twitter in November 2021, the stability of the company has been in constant flux. By the time Musk bought the company and assumed the role of CEO in October 2022, Twitter’s future seemed even more uncertain amid Musk’s controversial leadership, widespread cost cutting measures, and restructuring of the company. Since Dorsey’s departure, Israelite has taken to the platform to express his hope that subsequent chiefs like Parag Agrawal, Musk and now Linda Yaccarino would “finally” “take a new approach” with licensing music.
But in Wednesday’s lawsuit, the publishers said things had only gotten worse: “Twitter’s change in ownership in October 2022 has not led to improvements in how it acts with respect to copyright. On the contrary, Twitter’s internal affairs regarding matters pertinent to this case are in disarray.”
Licensing for games, social media, and other applications is quickly becoming a major component of music publishers’ income. At last year’s annual meeting, NMPA announced that licensing from new revenue streams — like Twitch, Roblox, Peloton and others — now account for 29.11% of music publishers’ income, something that is expected to only rise over time. This has come with the success of the NMPA’s aggressive legal agenda in recent years, and has helped publishers diversify their income from streaming, which is strictly regulated in the U.S. by the Copyright Royalty Board.
In the lawsuit against Twitter, the publishers noted that TikTok, Facebook, Instagram, YouTube, and Snapchat had all entered into such broader licensing deals, enabling their users to use copyrighted music while still compensating songwriters. Twitter, they wrote, cannot not continue to be the exception.
“Twitter is seizing for itself an artificial competitive advantage against companies that are not violating copyright law, undercutting existing markets, cheapening the value of music, and undermining Publishers’ well-established business models,” lawyers for the publishers wrote.
Songtradr has completed its acquisition of U.K. digital music company 7digital, the company announced on Thursday (March 30).
When the deal was first announced on Feb. 8 prior to being finalized, 7digital said it planned to accept a bid worth 19.4 million pounds ($23.4 million), with its shareholders set to receive 0.695 pence ($0.84) per share in cash, a 114% premium over the prior day’s closing price.
Songtradr is a music licensing marketplace and distribution platform that matches rights holders with brands via a searchable database. 7digital offers a range of digital music services for businesses, including licensing, tracking, reporting and paying rights holders. It has integrated with over 300,000 labels and publishers and boasts a catalog of over 80 million tracks.
In a release, Songtradr states that the acquisition “solidifies” it “as a key leader in the business-to-business music industry, establishing the company as the only one-stop music solution for digital platforms and brands worldwide.” Among other benefits, Songtradr says the acquisition will expand its ability “to power user experiences” on digital platforms including social media, lifestyle apps and video games while “extending its reach into new markets” — all thanks to 7digital’s “highly scalable” music delivery platform and “comprehensive” music catalog. 7digital’s list of clients includes global brands like Pinterest, Barry’s and Triller.
In a statement, Songtradr CEO Paul Wiltshire said the 7digital acquisition will help it achieve its goal “to remove the friction and help deliver scalable solutions for the music industry while simplifying music use for enterprise brands and digital platforms.”
Added 7digital CEO Paul Langworthy, “Together, we will have an unparalleled combination of catalog, technology, and capabilities, allowing us to better serve our current clients and offer new enterprise clients an exceptional range of data, services, and opportunities.”
Since the company’s launch in 2014, Santa Monica, Calif.-based Songtradr has raised over $100 million to build a company focused on solving many of the inefficiencies in music licensing. It acquired AI metadata and music search company Musicube in 2022, music licensing agency Massive Music in 2021 and licensing agency Big Synch Music in 2019. In 2021, Songtradr established a global creative division headed up by industry veteran Amanda Schupf. The company currently has teams in 16 countries.
As announced last month, Langworthy and the rest of 7digital’s senior leadership team will join Songtradr, though interim chairman Mark Foster, CFO Michael Juskiewicz and all nonexecutive directors will step down. Songtradr will also repay 7digital’s £2 million ($2.14 million) revolving credit facility as well as two £500,000 ($536,000) loans. The company will continue operating 7digital’s London office for now.
The acquisition by Songtradr closes out an unstable period for 7digital, which in July 2019 faced the possibility of entering administration — or the U.K. equivalent of Chapter 11 bankruptcy — unless it managed to raise £4.5 million ($5.5 million) in additional funds by the end of that month.
Superstar Pride’s breakout hit “Painting Pictures” has been one of music’s early success stories so far in 2023, as the song — part of the Mississippi MC’s 5 LBs of Pressure EP that was originally released last October — stormed onto the Hot 100, debuting at No. 99 in the week ending Feb. 25, before leaping to No. 35 the following week and No. 25 last week, reaching No. 7 on the Streaming Songs chart.
The song’s viral success — fueled in part by TikTok — caused a stir, with multiple labels coming in with offers to sign the rising rapper, who had originally uploaded the EP through independent distributor and services company UnitedMasters, launched five years ago by industry entrepreneur and Translation founder/CEO Steve Stoute.
But then, just as the song was beginning to reach new heights and seemingly poised to soar into the upper echelon of the charts, its momentum was briefly halted: The song’s production — which samples the Faith Evans song “Soon As I Get Home,” released in 1995 by Bad Boy/Arista Records — was flagged by Sony Music Publishing for not being properly cleared, the song was removed from Spotify for two days and some versions were also taken down from YouTube, though it remained available on Apple Music, Amazon Music and YouTube Music. The issue in part contributed to a 29% drop in U.S. streams over the prior week, from 14 million to 10 million, and “Painting Pictures” came in at No. 62 on the Hot 100 this week. (While the drop in placement on the Hot 100 is partially due to the streaming hiccup, the strong performance of Morgan Wallen’s new album One Thing At a Time saw its songs flood the Hot 100, meaning a placement jump would have been difficult regardless.)
That sample issue has now been cleared up, Stoute told Billboard this weekend. According to Stoute, Bad Boy chief Sean “Diddy” Combs, who also co-wrote and co-produced “Soon As I Get Home,” met Superstar Pride and “loved him,” and subsequently cleared the Faith Evans sample, paving the way for the song’s return to Spotify. Additionally, Stoute confirmed that Superstar Pride has decided to stick with UnitedMasters and remain independent for now, despite strong interest from major labels to sign him.
Now, Stoute and his UnitedMasters team are focused on re-starting the song’s momentum, with a video to be shot this week and a radio campaign that is now underway. In the past week, sales increased a modest 15% and radio airplay jumped significantly, up 270% week over week to 3.1 million in audience, according to Luminate.
“This video, more playlisting support, radio, that’s the next step to making a top 10 record,” Stoute told Billboard in a conversation last week. “It’s a phenomenal song that has been growing like wildfire. This seismic growth, I haven’t seen anything like this since Lil Nas X’s ‘Old Town Road,’ or something like that. It’s been pretty crazy when you look at the steep, hockey stick growth curve. But I give credit to the platform for being able to allow artists like Superstar Pride the opportunity to put music out, be able to track his performance and have the confidence that he’s distributing music and it’s in good hands.”
Superstar Pride originally uploaded the song on his own through UnitedMasters, before the company started to track its growth and reached out to offer support with playlisting and the TikTok campaign that eventually pushed it onto the Billboard charts. But Stoute sees the song’s success as stemming from its inherent quality — and as further evidence as to how the industry is changing.
“I think the artist should always own their music, because the biggest lift in all of this is the work that they did, which is making the song,” Stoute says. “There’s nothing a record company or anyone can do to make a non-hit a hit. And if the artist has a hit, in today’s music business, it’s less about what a record company can do and more about, how can you support the artist and what they want to do? It’s not like we have this magic silver-bullet idea that the artist doesn’t understand. What are your marketing ideas? What do you believe in? We’ll give you money and support to help accentuate what you believe in. And that’s why [artists] also get a lion’s share of the revenue — because it’s you. With the old record business, they didn’t respect that. The old record business was, ‘You make the song, and we’ll take it from here.’”
Since Stoute launched UnitedMasters in 2018, the music business at large has seen a shift as more services-oriented companies have come into the industry, and some established players shifted their business models toward a more distribution-and-services offering, giving artists more choices to chart their paths than the traditional record label model, while even the majors have increased their distribution offerings to reflect the reality of the marketplace. UnitedMasters, through Stoute’s sister company Translation, has marketed itself as an option with more brand services offerings to artists than its competitors; Translation represents clients such as the NFL, NBA, AT&T and State Farm, among others. But its path towards success also lies within the broader shifts in the industry.
“[The indie path] is much bigger than a cottage industry that is an alternative for people who can’t get a record deal; this is actually a solution that empowers the artist,” Stoute says. “[Superstar Pride’s success] is just another example of an independent artist finding tremendous success without the need to give up his rights, and ownership of his rights, to a record company. And the more successes that are happening like this much more frequently, the more people are seeing that the record companies are nothing more than just banks.”
What’s TikTok without music? That’s the central question at the heart of debates between major rights holders and the Bytedance-owned social media platform negotiating rates for their content, and a group of Australian users have been pulled into the middle to try to find out.
Earlier this month, it was revealed that that TikTok is running tests in Australia that limits the amount of licensed music some users can encounter on the platform. The test impacts fewer than half of Australia-based accounts, and it doesn’t affect everyone in the same way, according to a person familiar with the situation. The test puts people into multiple cohorts and provides them with different libraries of sounds to use in video creation. So, not everybody in the test will have the same catalog to choose from. Likewise, users in the test cohorts have different encounters with audio. Some people in test cohorts will encounter muted music on other users’ videos. This allows TikTok to compare and measure the different ways people interact with the app.
The results may inform TikTok’s licensing strategy, but evidence that some Australians are unhappy members of the test cohort can be seen on Twitter. “Tiktok really ruining its own app with all this ‘sound removed’ garbage,” one Australian user tweeted last week. Another echoed the sentiment: “wtf is up with tiktok removing like half the sounds??? like i swear ive seen SO many tiktoks where the sound has been removed.”
The risk of upsetting users and creators isn’t lost on TikTok. “We appreciate it’s disappointing if a certain track is unavailable or if a sound is muted on a previous video,” the company said in a statement. “This change will not be in place for long and not all music is affected.” The test will run from a month to a month and a half, according to a source familiar with the situation, meaning it should conclude by mid-March.
Why would TikTok degrade its user experience even in a relatively small market like Australia? A source familiar with the company’s thinking said TikTok is using the experiment to study what is trending, how users are accessing the platform through different entry points and how they are enjoying it. It is not a negotiating tactic, the person said. Nonetheless, the company is gathering the data during a year when most, if not all, of TikTok’s agreements with music rights owners come up for renewal. The source said it is predictable that TikTok would gather this information ahead of high-stakes negotiations, like those ongoing with major labels and other stakeholders.
Around the music industry, there are different interpretations for TikTok’s actions. One explanation is that TikTok is doing what tech companies do all the time: run tests, collect data and analyze the results. That narrative fits with what’s known. Australia, an important yet small and isolated English-speaking market, is a popular place for tech companies — Spotify, Facebook, Google, Tinder and others — to test new products. Much like these other companies, TikTok is an engineering-led company with engineers who want to take data-driven approaches to making decisions on how much time and resources should be invested in projects, building systems and, yes, even licensing rights. Sometimes, as history has shown with most of those other companies, too, a different mindset puts them at odds with creative industries.
“I don’t think they truly understand music at these tech companies,” says a record label executive. “It just doesn’t resonate with them.”
Negotiating tool?
TikTok, of course, has numerous people from the music world on staff: Ole Obermann, global head of music, and Tracy Gardner, head of licensing and partnerships, are former Warner Music Group executives. Jordan Lowy, head of music publishing licensing and partnerships, previously worked at Universal Music Group and Disney Music Group, and dozens if not hundreds of other music industry alums work at TikTok in editorial and artist partnerships. But the company looks and acts like a social media company, not a music company.
A less benign view of the test is that TikTok is looking for a rationale to argue music is not important to the platform – or not as important as labels believe. Annabelle Herd, the CEO of ARIA, the trade body for the Australian record industry, said TikTok “seeks to rationalize cutting artists’ compensation” and “downplay the significance of music on its platform.” Another industry executive believes the test is meant to lower expectations going into discussions with rights holders. “They’re looking to anchor their negotiating position near zero,” says a music industry source.
TikTok has spent years playing up music’s importance to creators, users and artists. “Music is at the heart of the TikTok experience,” Obermann stated in the opening words of the TikTok 2021 Music Report. That year, around 430 songs surpassed 1 billion views, up 200% from the previous year, and over 175 songs that trended that year charted on the Hot 100. In the company’s 2022 year-end report, Obermann reiterated TikTok’s value to artists, saying the platform “continues to unlock real-world opportunities for artists and labels, helping talent to secure record deals, brand collaborations, chart success, or be re-discovered decades later.”
And while the platform has certainly evolved beyond lip-syncing videos – book reviews and finance advice abound, for example – much of the recent news coming out of the company still involves music: StemDrop, an interactive, collaborative songwriting platform led by Max Martin, Syco Entertainment, Universal Music Group and Samsung; a Calvin Harris virtual reality concert; and welcomes to The Rolling Stones and Dolly Parton for joining the platform.
Anecdotally, exactly how important records labels’ music is to TikTok is debatable. Its top three trending songs of 2022 were independent releases, and the No. 1 song, “Sunroof” by Nicky Youre & Dazy, was originally released independently through SoundOn, TikTok’s music distribution business that’s been known to add promotion to music uploaded through its service. In all, only five of the top 10 of 2022 were signed to major labels. Major label music is arguably more important to on-demand streaming platforms and radio stations. By contrast, all the top 10 tracks of Billboard’s year-end Hot 100 and Radio Songs charts were released through major labels.
But major label music is everywhere on TikTok. Lizzo’s “About Damn Time” was the No. 4 trending song of 2022. Pharrell Williams’ “Just a Cloud Away” was No. 5. Kate Bush’s “Running Up That Hill” was No. 10. And TikTok’s ability to give unknown artists a large audience increases its need to license music from labels. “Sunroof” was so successful that Youre signed with Colombia Records and reached No. 4 on the Hot 100.
What’s past is prologue
TikTok has ample motivation to reduce what it pays music rights holders. Licensing costs eat up more than 70% of a music subscription service’s revenue with little left over after paying operating expenses. Social networks, on the other hand, generate huge sums of free cash flow. Facebook, for example, had an operating margin of 25% in 2022 and 40% in 2021.
Services that once butted heads with music rights holders decided it was wiser to build partnerships that enriched both sides. Like TikTok, YouTube began as an ad-supported platform built on user-generated content and characterized by minuscule royalties. Over time, YouTube attracted better advertisers, built a strong on-demand premium service and became a major source of revenue for labels and publishers. In the 12-month period ended June 30, 2022, YouTube paid music rights holders $6 billion through YouTube advertisements and fees from the YouTube Music subscription service.
Now, YouTube has “a phenomenal partnership” with rights owners after it “decided that music is important to us forever,” Warner Music Group CEO Robert Kyncl, YouTube’s former chief business officer, said during WMG’s Feb. 9 earnings call. It invested in music “holistically” by building a copyright management platform, Copyright ID, launching the YouTube Music subscription service and taking on TikTok with its short-form video platform, YouTube Shorts.
TikTok appears to share YouTube’s ambitions to offer a multitude of services that segment the market into ad-supported and paying customers. Parent company Bytedance already has an on-demand music service, Resso, operating in Brazil, Indonesia and India, and a separate on-demand service, Qishui Yinyue, in China. But in major markets like the U.S., TikTok users that want to listen to an entire track and explore an artist’s catalog end up going – in large numbers – to on-demand services like Spotify and Apple Music. Pairing its short-form video platform with an on-demand service would give TikTok a “significant opportunity” to leverage data and manage customers across multiple platforms, says one of the music industry sources. “Why would they not want to capture that demand themselves?”
“TikTok needs to do that [also],” Kyncl said during Warner’s earnings call. “It’s the right decision for them to evaluate.”
Additional reporting by Liz Dilts Marshall
