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It’s Wednesday, folks. Strategic bites is here to heal all your emotional wounds now that Taylor Swift music isn’t available for any of your TikTok’s.
We’re covering the UMG/TikTok feud this week. Mainly, we’re going to talk about TikTok’s enormous leverage over the entire music industry.
We saw companies like Amazon featurizing Hollywood.
Well…TikTok is featurizing the entire music industry.
Let’s get into it
TL;DR INDEX CARD
1. TikTok has pulled all of UMG’s artists on its platform (Drake, Taylor Swift, etc.) due to their deal expiring at the end of last month.
2. TikTok is lowballing UMG on the new deal, which is a cheaper deal than the last one.
3. It’s probably because TikTok recognizes its leverage as an incredible distributor for music, where users can get exposed to new music and artists old and new, which drives streams to other subscription services.
TikTok and UMG: The beginning of the end
UMG and TikTok are feuding over payment for Music royalties.
UMG is challenging the terms of an agreement renewal, stating that TikTok is proposing a deal that’s worth less than than their previous deal (which expired on January 31st).
TikTok’s agreement with labels is a little different than what you’d see with Music streaming companies like Spotify or Tidal.
The company does a ‘bulk’ agreement where it pays a lump sum to the music label and TikTok then has a license to use the music freely in user-generated videos. That means views on a video with a particular song doesn’t necessarily mean a higher payment to the label/artist.
Leverage: Who has it? Who doesn’t?
We’re hammering the point home one more time:
Incredible content and great distribution is the recipe for greatness
UMG has incredible music content, and TikTok is possibly one of the best distributors of music out there right now. But it kinda feels like UMG is eventually going to cave to TikTok’s deal.
Why? Simple: Not having Drake’s music on TikTok isn’t going to cause people to leave TikTok.
UMG’s business is music. Music is 100% their business. That music is one of the many features of TikTok.
Prediction Time: TikTok is getting into the music business
In 3-4 years time (whenever TikTok’s deals w/ distributors expire), there isn’t anything holding TikTok back on signing artists directly and distribute music on their platform.
Here’s how it’d work:
You hear a catchy song from a new artist on a video
Video goes viral
Music gets found on Spotify/Apple Music/Tidal
TikTok gets paid, and the artist gets paid.
It might work well with artists, where a proprietary relationship with the platform would probably command higher royalties for artists.
Only this time, TikTok would probably have free use on the music to create AI generated tunes. Those tunes would remove all royalty/rights friction.
This outlook would probably destroy the music industry as we know it.
How would we avoid this?
Easy. Ban TikTok in the US. We don’t know how many times we can say it.
What AI Made This Week
Sick Fits by Ahmed
We’re going to get a few reactions here. But Chris Broussard is the best dressed man in sports television.
No one says it, but it’s 100% true. Watch any of his FS1 appearances. I dare you. You won’t find anything less than perfect outfits.
via @chrisbroussard68 on instagram
Have a great week!
Ahmed and Peter
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