Welcome to the latest episode of Music Business Worldwide's Talking Trends, supported by Voly Music.
In this episode, MBW founder Tim Ingham discusses the model under which TikTok currently pays the music industry.
Music Business Worldwide sources suggest that TikTok's deals with rightsholders are currently 'buy-outs' – i.e. the platform pays a lump sum upfront, rather than paying a revenue share based on each artist/label's popularity on its platform.
With TikTok's revenues expected to triple to $12 billion in 2022, concerns are growing amongst music companies that TikTok could soon get "too big and too powerful" to force into an agreement that sees it "pay music rightsholders properly".
Says Ingham: "The music industry is growing increasingly worried that it's about to star in a movie we've seen play out time and time again when it comes to music's relationship with tech and media giants.
"In short, that movie is about a tech or media giant – you've guessed it! – 'building its business off the back of artists' without paying those artists what they deserve.
"As my major record company source put it to me the other week: 'Soon TikTok is going to be too big and too powerful for us to force it into a revenue share deal. The last time we let a company of this size and power run away with things without paying us properly... was MTV."
Ole Obermann, TikTok's Global Head of Music, has told Music Business Worldwide in response to this podcast: ""From the outset we wanted to pay rightsholders and we built a team to do that. We're proud of the deals we've struck and how in a few short years we've been able to offer a new and growing revenue stream to the industry, as well as becoming a powerful marketing and promotional platform for artists of all genres.
"We're delighted by the success [that] artists, both new and old, have found using TikTok; connecting with fans and kick-starting their careers. This success and the power of our platform has translated into record label and publishing contracts [for artists], the launch of careers, significant streaming uplift and TikTok having a positive impact on charts worldwide.
"TikTok is a unique service and has pioneered the adoption of short-form video. We're not a streaming platform and we do not offer a subscription model. We negotiate our licenses on a rolling basis and as engagement with music on TikTok evolves, our business model will also evolve."
Adds Obermann: "We want to play our part and contribute to a growing music industry, enabling music creators and makers to find success both on and off our platform.”