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Warner Music CEO Says Their Deal With TikTok Is “Fair,” Believes Universal Impasse Will Be Resolved

Warner Music Group CEO Robert Kyncl said his company remains happy with their deal with TikTok and he believes the social media platform and Universal Music Group will also come to an agreement.

“I’m always very confident in the deals that we do. We don’t follow other companies. We don’t do carbon copies of other deals, we do our own, which is why we did the one last year,” Kyncl said.

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“Our deal was very difficult too, but we got there and, for us, it was fair, but it was a year ago. It was also a different time. So I don’t know what is driving Universal’s positions, but if there’s any way we can help them, we will, all of us, and I’m confident they’ll sort it out,” he continued.

Universal Music Group began pulling its songs from TikTok at the end of January, after failing to come to an agreement on a new licensing deal. Universal said its sticking points were concerns over AI and fair compensation.

Speaking on Warner Music’s first-quarter earnings call Thursday, Kyncl, who was previously chief business officer at YouTube, noted that he’s been on both sides now in negotiations like this and has found that having music on tech platforms is mutually beneficial. At YouTube, music and trends helped contribute to the virality of videos, he said, and the platform helps contribute to user engagement and to make the music more popular, he said.

“There are mutual benefits here. And it’s just about what is the right fair-value exchange. And sometimes you have to go through the price discovery and pull this kind of a step, and that’s OK too, because people find out exactly what it is and what it means for them,” he said.

CFO Bryan Castellani noted that Warner Music Group’s ad-supported revenue growth was up 10 percent compared to a year ago and that TikTok had contributed to that.

“We like our TikTok deal, and it continues to be a driver of growth,” Castellani said.

Asked whether Warner Music’s deal with TikTok protects against the creation of AI music on the platform, Kyncl said it’s an issue that’s relevant across all tech platforms and that he has been focused on protecting artists against AI starting with the platforms, then on the generative AI engines, and lastly on government and regulation.

He added that he could not share details on the specifics of the deals but that it’s a “top area of priority.”

“Our work is focused on making sure that the rules of the road on those platforms respects copyright, and we have a lot of copyrights. Universal has a lot of copyright. Sony has a lot of copyright, and many others, Disney, etc. So it’s really important to have clear rules of the road, not only for the first- party content that they’re creating with their tools, but even more importantly, for content that is created and other tools that end up there,” he said.

The comments on TikTok come as Warner Music Group reported a strong first quarter, with net income of $193 million versus $124 million in the prior-year quarter and revenue of $1.78 billion, up 17 percent year-over-year. However, the company said Wednesday night that it would be laying off 600 people in an effort to free up more money for music investment across the next decade. The layoffs will primarily impact the company’s owned and operated media properties, including entertainment websites Uproxx and HipHopDX.

“WMG is a thriving company in a unique and growing industry we’re in a position of strength at a pivotal moment in the music business. And that’s the smart time to change, innovate, and lead. Yesterday we announced the plan to free up more funds to invest in music and accelerate our growth for the next decade. To do that, we have to make thoughtful choices about where we put our people, resources and capital,” Kyncl said on the earnings call.

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