Common Music Group’s three-month hiatus from TikTok ended this week after the businesses reached a new, multi-faceted licensing settlement. On Thursday, UMG executives defined why it was well worth the wait.
The underside line: UMG believes its new licensing take care of TikTok is an enchancment over the deal that expired on the finish of January. UMG has “considerably improved the full worth we’ll derive from this relationship,” CFO Boyd Muir stated. Michael Nash, government vp/chief digital officer, stated the brand new TikTok deal “undoubtedly ship[s] a good stage of worth relative to different quick type social platform companions,” which incorporates Instagram Reels, YouTube Shorts and Snap.
In Thursday’s earnings name and CEO Lucian Grainge’s inside memo obtained by Billboard the identical day, Grainge, Muir and Nash talked about quite a few parts of the brand new deal that may be damaged into two camps: income and non-revenue options and preparations.
As for income, there can be extra of it below the brand new deal — though not one of the executives shared particular deal factors reminiscent of promoting income sharing charges. Nash stated that “income below this new deal does markedly enhance over our final deal.” The earlier deal amounted to about 1% of UMG’s annual revenues, which works out to about $120 million euros primarily based on 2023 income. That’s not a lot for a platform that instructions a median of 58 minutes per day within the U.S., based on eMarketer — nearly as a lot as Netflix and greater than YouTube.
However UMG is getting extra worth out of TikTok in types aside from royalties. A lot of these non-revenue parts usually value cash to labels: e-commerce instruments, advertising and promotion campaigns and advert credit. Different features of the deal have worth that’s arduous to pin down: knowledge, artist insights, intelligence and new packages and new collaboration alternatives.
One attention-grabbing facet of the brand new deal is what Nash known as “content material administration and attribution.” When TikTok customers submit movies with sped-up and slowed-down recordings, attribution for the UMG recording is credited “not [to] some infringing third get together, however the artists,” stated Nash. “And that content material is best linked with their official presence on the platform.”
As Grainge outlined in an inside memo to workers on Thursday, the deal additionally met the 2 non-revenue standards: safety in opposition to the dangerous results of AI and prioritizing on-line security for each TikTok customers and UMG’s artists.
TikTok made “quite a few commitments” that respect UMG artists’ works and rights of publicity and helps UMG’s rules on coaching AI fashions with out consent from rights holders. UMG desires to guard its artists in opposition to deepfakes reminiscent of “Coronary heart on My Sleeve” by Ghostwriter, which used AI-generated soundalikes of Drake and Kendrick Lamar (each UMG artists). The brand new deal ensures such faux content material can be eliminated, each Grainge and Nash stated.
Nash additionally described these efforts to fight infringing content material as “elevated necessities” that detect and keep away from infringing content material,” together with leaks, unauthorized remixes and unauthorized AI variations. The deal additionally accommodates necessities for improved filtering and stream manipulation detection.
As well as, TikTok agreed to enhance on-line security and try and mitigate the dangerous results of social media, together with hate speech, bullying, accountable use of AI, and addressing infringing content material and algorithmic manipulation, Grainge wrote in his memo.
Social media earnings may not quantity to a lot right now, however it “is more and more necessary earnings to artists, songwriters, labels and publishers,” stated Grainge throughout Thursday’s earnings name, “which is why we’ve pushed so arduous and we’ll proceed to push to guard and to develop it.”
Supply hyperlink