End of an era: Universal pulls music from TikTok in startling contract fallout

Universal Music Group (UMG) released an open letter declaring their decision to pull their catalog from the popular internet platform TikTok. The music industry giant, which is the largest business group and family of record labels, has accused the Chinese company of attempting to "bully" and "intimidate" them into "accepting a deal significantly lower in value than the previous contract, far below fair market value, and not reflective of their exponential growth".

Also read: Are early elections on the horizon? Political scientist speculates on potential outcomes

In their open letter, UMG details their discussion with TikTok surrounding "fair compensation" for their artists and songwriters who have "suffered due to the use of artificial intelligence (AI)":

We will always champion our artists and songwriters, and defend the creative and commercial worth of their music - we read in UMG's open letter.

TikTok was quick to respond. The internet platform's representatives accuse UMG of prioritizing their own financial interests over those of their artists. The Chinese company refutes the charges of neglecting artists:

Contrary to Universal's misleading narrative and rhetoric, the truth of the matter is they chose to abandon the robust support of a platform with over one billion users that serves as a valuable promotional tool and a channel for discovery of their talent. TikTok has successfully entered into “artist first” agreements with every other record label and publisher. Universal's self-serving actions evidently don't align with the best interests of their artists, songwriters, and fans - we read in TikTok's statement

The popular Chinese platform is reported to have raked in nearly 20 billion dollars in ad revenue last year.

What are the practical implications of UMG's failed negotiations with TikTok? Users of the Chinese internet platform will have to forgo using the music of notable stars such as Taylor Swift, The Weeknd, ASAP Rocky, Bob Dylan, and virtually any well-known artist or band from radio and TV in their videos.

In the absence of UMG's catalog, the Chinese behemoth might be less inclined to invest in their new venture, TikTok Music, which is designed to challenge other streaming services like Spotify and Tidal.