By Dawn Chmielewski and David Shepardson
(Reuters) – Universal Music Group (AS:) and TikTok said on Thursday that they had reached a new licensing agreement that will restore the label’s songs and artists to the social media platform.
TikTok began removing Universal’s content from its app after their licensing deal expired in January and the two sides failed to reach agreement on royalty payments to artists and songwriters, protections from artificial intelligence (AI), and online safety for TikTok’s users.
The short video app is a valuable marketing and promotional tool for the music industry. TikTok is where 16- to 19-year-olds in the United States most commonly discover music, ahead of YouTube and music streaming services such as Spotify (NYSE:), according to Midia Research.
“Roughly a quarter of U.S. consumers say they listen to songs they have heard on TikTok,” said Tatiana Cirisano, Midia’s senior music industry analyst.
However, Universal Music claimed its artists and songwriters are paid just a fraction of what it receives from other major social media platforms.
The music label said TikTok accounts for 1% of its annual revenue, or about $110 million in 2023. YouTube, by contrast, paid the music industry $1.8 billion from user-generated content in the 12 months ending in June 2022, according to Midia.
In a move that may well have eroded its bargaining power, Taylor Swift, one of Universal Music’s biggest acts, allowed a selection of her songs to return to TikTok as she promoted her latest album, “The Tortured Poets Department.”
Swift owns the copyrights to her recordings through her 2018 deal with Universal, and can control where her songs are available, according to the Financial Times.
As licensing negotiations resumed in recent weeks, AI has remained a major point of contention. Universal has claimed TikTok is “flooded” with AI-generated recordings, including songs that users create with the help of TikTok’s AI songwriting tools.
TikTok has maintained these AI-generated works should be eligible for royalty payments, a position Universal opposed, arguing it would dilute the pool of money available to compensate human performers and composers.
Concerns about AI are growing in the creative community. In April, a non-profit group called the Artist Rights Alliance published an open letter urging the responsible use of the technology. The group of more than 200 musicians and songwriters called on technology companies and digital music services to pledge not to deploy AI in a way that would “undermine or replace the human artistry of songwriters and artists or deny us fair compensation for our work.”
The deal comes amid questions over TikTok’s long-term future in the United States. President Joe Biden signed legislation last week that gives TikTok’s Chinese owner, ByteDance, 270 days to sell its U.S. assets. TikTok has vowed to file suit to challenge the legislation, which it calls a ban.
More than 170 million Americans use its video service, according to TikTok.
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