TikTok has failed in its bid to restart talks with Universal Music, with the two powerful companies at a standoff over money, copyrights and how to handle songs created by artificial intelligence, according to people familiar with the matter.
The impasse means even more musicians face the prospect of their work disappearing from the social media platform, one of the biggest drivers of music consumption in recent years.
Universal, which controls a third of the world's music, stopped licensing its music to TikTok last month after a year of tense negotiations. Many videos on the site have already been muted, but the controversy is heating up significantly this week as millions of songs are set to be muted.
Over the past few weeks, TikTok executives have repeatedly contacted Universal executives in an attempt to restart negotiations. Ole Obermann, head of music at TikTok, Zhen Cao, head of music at parent company ByteDance, and TikTok chief executive Shou Ji Chew have communicated via emails, text messages, Zoom and phone calls, according to people familiar with the matter.
However, Universal, the negotiating team led by digital chief Michael Nash and chief executive Lucian Grange, did not consider TikTok's offers to be good enough to agree to a deal, these people said.
When talks broke down last month, TikTok offered to pay Universal a „low single digit” percentage of its ad revenue for the use of its music, which includes a lineup of stars like Taylor Swift, people familiar with the matter said. , Drake, The Weeknd and Lana Del Rey.
TikTok recently came back with a bigger offer, but still less 20 percent A cut of the ad revenue YouTube pays to the music industry, according to people familiar with the matter.
The other big sticking point is the AI. Universal wants TikTok's royalty money to go to human musicians, while TikTok wants to share the „royalty pod” with fans who use AI to create their own tracks. Universal considers it a non-starter, people familiar with the matter said.
In a statement Wednesday, TikTok said it was „committed to reaching an equitable agreement” with Universal, but it was in the process of fulfilling the music company's demand to remove all songs written or co-written by one of its songwriters. .
„Their actions not only affect the songwriters and artists they represent, but also many artists and songwriters who are now not signed to Universal,” TikTok said.
The stand-off is among the most heated clashes between tech giants and media conglomerates in recent memory as they battle to control the future of entertainment.
Major music companies make billions of dollars a year in royalties from streaming services and social media platforms including Spotify, Apple and Meta. They usually renegotiate these deals every two years, and the licensing talks are often tense but almost always result in a deal.
It's the first time Universal has taken its music off the tech giant's stage in the streaming era. The outcome of the TikTok-Universal dispute will affect music revenue for years to come.
Oberman, a former Warner Music executive who joined TikTok in 2019, has been at the forefront of negotiations to lead its negotiations with major music labels. However, his boss at Byte Dance, Jen, has been involved in recent weeks, with communications appearing at times disjointed, according to people familiar with the matter. Chew, the Singapore-based chief executive of Tiktok, is trying to get in touch with Universal to restart negotiations.
This stance has left Universal artists without their biggest marketing tool, as TikTok users see their posts muted en masse.
Beyoncé, who signed with Universal's rival Sony, seems to have benefited from this stance. His new song „Texas Hold 'Em” soared to the top of the Billboard charts, helped by its prominence on TikTok, where users post hundreds of thousands of videos using the track.
However, this week's expansion of licensing downgrades will also affect artists not affiliated with Universal, such as Beyoncé.
Every song has two copyrights: one for the recording, and one for the „publication,” meaning the writing and composition. Starting late Monday, TikTok began removing songs linked to Universal's publishing division. This also means that the work of artists who collaborate with songwriters signed to Universal will be eliminated.
According to these rules, “Texas Hold Em,” co-written with Raphael Sadiq, who is signed to Universal, will be muted on TikTok.
Some executives and analysts estimate that 60-80 percent of all popular music on TikTok will be muted this week. TikTok disputes this, saying the figure is closer to 30 percent.
People close to TikTok have argued that it has not lost users since Universal's delisting, but that the controversy is affecting the wider industry.
On Universal's earnings call on Wednesday, Grange said: “We're friendly people. Unfortunately, my phone is open 24 hours a day. . . We negotiate with sites worth trillions. I have spent my entire life creating win-win situations.
The song Waiting Before the Call features Sophie Ellis-Bexter's „Murder on the Dance Floor,” which Universal has rights to, and which has become popular on TikTok in recent months.