Insights #015: UMG and TikTok Reach Landmark Agreement

In a significant move, Universal Music Group (UMG) and TikTok forged a new partnership just a day before their previous contract was set to end. Following three months of negotiations, this collaboration is poised to address several key issues that have been negatively impacting artists and songwriters. The agreement covers artificial intelligence (AI), usage platform safety, and artist compensation, which is a significant milestone in the music industry’s ongoing evolution.

Enhanced Compensation for Artists and Songwriters

The improved payment structure for UMG songwriters and performers is essential to the new deal. Previously, there was significant disagreement over the revenue split from websites such as TikTok, which make a sizable amount of money from user-generated music-related material but often do not provide fair compensation to the artists whose work drives this content. This inequitable revenue distribution has been a significant issue for rights holders, including independent and major-label affiliated artists, as they struggle to receive a fair share of the profits generated from their music. The new rules will put UMG artists’ compensation in line with other social music platforms like Snapchat, Instagram, YouTube Shorts, and Spotify, potentially resulting in a significant increase in income for artists, according to UMG CEO Lucian Grainge. This increased profit for artists would be crucial since social media platforms are now an important place where music is consumed. For artists and composers to be able to support their livelihoods, everyone in the music distribution supply chain must pay what is due to the rights holders.

AI Content Management and Protection

UMG has been vocal about the risks posed by AI-generated content, which can dilute the royalty pool for artists. The new deal with TikTok includes commitments to respect the rights and works of artists, preventing unauthorized AI-generated content from infringing on their IP. This agreement resembles UMG’s partnership with YouTube last year when the two companies launched the “YouTube Music AI Incubator.” This initiative aimed to develop tools and frameworks to balance AI’s potential benefits and risks in the music industry. It focused on creating a responsible and profitable ecosystem where artists can maintain their creative integrity and be fairly compensated. This includes removing fake artist content and ensuring that AI training does not occur without consent. These measures are part of UMG’s broader responsible AI initiative, which aims to use AI’s untapped potential while protecting human artists from its adverse effects.

Platform Safety Enhancements

TikTok has also agreed to implement enhanced safety measures to protect its users and artists featured on the platform. This includes developing tools to prevent and repair issues such as hate speech, bullying, and the spread of deepfakes (audio or visual content that uses generative AI to mimic a person’s likeness or voice). These steps are intended to create a safer and more supportive environment for artists and their fans, addressing broader concerns about the negative impacts of social media on mental health and community standards.

The Broader Implications

The new UMG-TikTok agreement is a significant development for UMG and its artists and sets a precedent for the entire music industry. By addressing key issues such as AI, compensation, and platform safety, UMG is playing a pivotal role in shaping the future landscape of digital music distribution. The support from various sectors of the global music community, including artist rights organizations and individual artists, underscores the importance of these issues and the necessity for collective action to address them.

We hesitate to say if this UMG-TikTok agreement is a crucial step towards a more equitable and sustainable future for the music industry. UMG has been responsible for ensuring equitable compensation to artists and rights holders for years. However, we are curious to watch them protect artists/asset from exploitation, as well as increasing IP and shareholder value as AI technology advances.

UMG seems to be setting a standard for how social media platforms should interact with the music artists create and/or license. Moving forward, AI isn’t going anywhere; the industry will have an ongoing need for transparency, foresight, and accountability to ensure that the technological advancements made possible by AI do not come at the expense of artist ownership and fair compensation.

References:

Murtagh-Hopkins, J. (2024, February 21). YouTube announces AI Music principles and launches YouTube Music AI incubator with artists, songwriters and producers from Universal Music Group. UMG. www.universalmusic.com/youtube-announces-ai-music-principles-and-launches-youtube-music-ai-incubator-with-artists-songwriters-and-producers-from-universal-music-group/?

Ingham, T. (2024, May 2). Sir Lucian Grainge confirms “greater compensation” is coming from TikTok for? UMG artists and songwriters. Music Business Worldwide. www.musicbusinessworldwide.com/sir-lucian-grainge-confirms-greater-compensation-is-coming-from-tiktok-for-umg-artists-and-songwriters