Universal Music Group has threatened to remove all of the music it owns from TikTok, unless the streaming platform agrees to more favorable terms for its vast catalog.

Negotiations between the social media giant and the world's largest music company have intensified as they've worked to hammer out a new contract, says Tatiana Cirisano, a music industry analyst at Midia Research. The current one expires on Jan. 31, 2024.

"UMG is kind of taking the nuclear option of removing all their music and trying to prove ... that TikTok couldn't exist if it didn't have their catalog," she says.

Early Wednesday morning, UMG released what it called "An Open Letter to the Artist And Songwriter Community – Why We Must Call Time Out On TikTok." The letter, one suspects, is actually for music fans and tech watchdogs as well.

"In our contract renewal discussions, we have been pressing them on three critical issues," the letter says of TikTok, noting the issues include protection against AI-generated recordings, online safety issues for users and higher compensation for its artists and songwriters.

"With respect to the issue of artist and songwriter compensation," the letter continues, "TikTok proposed paying our artists and songwriters at a rate that is a fraction of the rate that similarly situated major social platforms pay. Today, as an indication of how little TikTok compensates artists and songwriters, despite its massive and growing user base, rapidly rising advertising revenue and increasing reliance on music-based content, TikTok accounts for only about 1% of our total revenue. Ultimately TikTok is trying to build a music-based business, without paying fair value for the music."

Compensation is the big sticking point here, says Cirisano. "I would also point out that this is probably going to do more for Universal Music Group as a company than it is for any of their individual artists and songwriters," she says.

In a statement on social media, TikTok accused UMG of promoting "false narratives and rhetoric" and of putting "greed above the interests of their artist and songwriter."

"TikTok has been able to reach 'artist-first' agreements with every other label and publisher," it says. "Clearly, Universal's self-serving actions are not in the best interests of artists, songwriters and fans."

Cirisano says the idea of TikTok building what UMG calls a "music-based business" has some merit. TikTok used to be just a place where artists could get exposure and market their music, she says. But the platform and its users are evolving.

"It's becoming sort of a form of music consumption in its own right," she says. "This is a space where especially young people are going on and listening to music ... as they're consuming. It's a completely different experience than, say, adding a song to your Instagram story or things that were happening in the past."

The dispute should not overly affect the well-being or popularity of the labels' roster of celebrity artists, she adds, which includes Taylor Swift, Lady Gaga and Elton John. But for the many other musicians whose work has become a part of TikTok's fabric, there are larger implications for the future.

"There's this really fast growing sector of independent artists and what is commonly referred to as 'the long tail' that are also releasing their music to streaming services and competing for attention," she says, referring to all of the other music floating around that's available to be used. "There's a lot of other music that TikTok users have access to beyond the major label catalog than they would have five or 10 years ago. UMG is still the most powerful player here, but I think those dynamics have shifted a little bit."

TikTok and other social media platforms, she says, are where new fandom and cultures are being built — and the music industry's power players are wary of being left behind.

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