Labels demand a big increase in TikTok royalties but fear angering their new friend

UMG, Sony and WMG are demanding a major increase in payments from TikTok and their negotiations will affect all songwriters, musicians, and labels.

TikTok logged $4 billion in 2021, and its revenue is projected to rise to $12 billion this year. Now labels want TikTok to pay 2 to 10 times more than their existing agreements. That would bring TikTok on par with royalties paid by similar ad-supported social platforms, including Facebook and YouTube.

“We are committed to creating value for rights holders, songwriters, and artists when their music is used, and are proud of the deals we’ve struck and the growing revenue stream we’ve delivered to the industry in a few short years,” Ole Obermann, TikTok’s global head of music, told Bloomberg. He previously worked as the chief digital officer at Warner Music Group.

‘Let’s not make TikTok mad’

Hovering over the negotiations is the reality that TikTok has become an important vehicle to promote new and catalog music as well as to break new artists.

Pulling music aff TikTok is not a viable option.

This is a dilemma similar to the one that labels and music publishers found themselves in more than a decade ago when YouTube exploded as a vehicle for music.

After years of gradual increases, many still believe that YouTube still does not pay creators and rightsholders enough.

Bruce Houghton is the Founder and Editor of Hypebot and MusicThinkTank, a Senior Advisor at Bandsintown, President of the Skyline Artists Agency, and a professor for the Berklee College Of Music.