Universal Music Group CEO On New TikTok Deal: “Human Artistry Must Be Respected”

Etan Vlessing
·3-min read

Universal Music Group chairman and CEO Lucian Grainge has applauded a new music licensing deal with TikTok which ends a recent months-long standoff over royalties to be paid out around the social media platform.

“It’s another significant step we’ve taken to guide the industry’s evolution to a future where human artistry must be respected,” Grainge told an analyst call after the release of his company’s first quarter financial results. He argued the resolution of the TikTok dispute had impacts beyond a single social media platform.

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“The income from social media is increasingly important income to artists, songwriters, labels and publishers, which is why we’ve pushed so hard and we will continue to push hard to protect and to develop it,” Grainge warned.

“Ultimately, the point of engaging in such conflicts is to find a higher common ground from which new and greater progress can be made. I’m enormously proud of what our teams and our artists have been able to achieve with TikTok in finding common ground on which we will build a foundation for a brighter future,” he added in prepared remarks.

During its first quarter, UMG saw overall revenue rise 5.8 percent to €2.59 billion (US$2.77 billion). The adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 13 percent to €591 million (US$632 million.

Recorded music subscription revenue grew 10.7 percent to €1.99 billion (US$2.12 billion), into which subscription and streaming revenue at 8.9 percent to €1.46 billion (US$1.56 billion) accounted for the bulk of that category.

Music Publishing revenue grew 16.7 percent to €496 million (US$531 million) as the music labels top sellers were Taylor Swift, Noah Kahan, Morgan Wallen, Ariana Grande and Olivia Rodrigo.

On Wednesday, UMG unveiled a new “multi-dimensional licensing agreement” to end a dispute with TikTok over how music royalties are paid. That tussle led UMG artists to be pulled from TikTok until a new deal could be hammered out and the music label’s roster could return.

After the end of the dispute with TikTok, UMG is also expanding its strategic relationship with the Spotify streaming music platform to allow the distribution of music videos, with implications for licensing terms. “Spotify has been an incredibly good partner on everything that we try to do to grow the entire pie to grow the business,” Grainge told analysts.

UMG execs did not reveal with detail any deal points on the new TikTok music licensing deal during the afternoon call, but did stress it offers better terms to compensate artists for the use of artificial intelligence on social media platforms and elsewhere in the entertainment industry.

“We have substantially improved the total value to be derived from this relationship… The economics will ultimately improve our position,” UMG CFO Boyd Muir told analysts about the benefits of disputing and then resolving the TikTok deal. As part of the new agreement, TikTok has agreed to curtail content on its platform that misappropriates the identity of UMG artists and infringes on their publicity rights.

The music label earlier decided to embrace AI as a new technology to enable its roster of artists to drive new revenues from new products, while enforcing their copyrights. Rival Warner Music Group, home to the likes of Ed Sheeran, Cardi B and Bruno Mars, has also signaled a willingness to use AI technologies, even as the industry faces a challenge from AI-generated music content and increasing competition from indie music labels.

Grainge on an analyst call also touted the record-setting release of Taylor Swift’s latest surprise album. “Her newest album, The Tortured Poets Department, has shattered records around the world as the biggest album of the decade, and the biggest debut of her career,” he said.

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