In today's CMU Daily: TikTok and Universal face off over licence renewal; UK government publishes long-awaited Transparency Code

One Liners: Believe deal; Big Machine promotions; MLC review; BMG drops Roger Waters; Jake Shears podcast; MOBOs; Adele, A Boogie Wit Da Hoodie, BRITs Week, Body Count shows; new music from PSB, Paramore, Becky Hill, Ghetts, Breeders, BADBADNOTGOOD, Camera Obscura, Ibibio Sound Machine, Louis Carnell, Narcotix

Also today: The F-List's Vick Bain responds to the Misogyny In Music report in an exclusive CMU Op Ed; SACEM + GEMA publish report on music and AI

Plus: CMU sits down with Believe UK Managing Director Alex Kennedy in our continuing series of interviews looking at challenges and opportunities in the music business in 2024

Universal Music is going to war with TikTok, accusing the social media giant of bullying and intimidation

TikTok’s contract that allows it to use content from Universal Music expires today. In an “open letter to the artist and songwriter community”, UMG has made it clear that the current terms proposed by TikTok to renew that contract are not acceptable. Tiktok, says the letter, wants to “intimidate” Universal into “conceding to a bad deal that undervalues music and shortchanges artists and songwriters as well as their fans”. The music company then bluntly adds that “we will never do that”.

To use music content from Universal and other music companies, TikTok requires a licence, the contract that sets out the relationship between the social media giant and the music companies it works with. Typically, those sorts of contracts are negotiated and renewed before they expire. Warner Music Group, for example, announced its “first-of-a-kind expanded agreement” with TikTok back in July 2023.

For the negotiations between Universal and TikTok to have come right down to the wire - and the breakdown in those negotiations to be exposed so starkly by Universal’s letter - shows just how far apart the two companies are, and how badly the negotiations have faltered.

Negotiations have apparently stalled over three key terms: “appropriate compensation” for TikTok’s use of music and “protecting human artists from the harmful effects of AI”, but also TikTok’s wider stance on “online safety for users”.

The extent of the breakdown in negotiations is made clear in Universal’s letter, which makes the startling accusation that TikTok attempted to “bully” Universal into accepting a new deal worth less than its previous deal. That deal proposed by TikTok was “a fraction of the rate that similarly situated major social platforms pay” and “far less than fair market value” that did not reflect the “exponential growth” and success that TikTok has seen.

According to a recent investigation by the FT, TikTok’s success has seen parent company ByteDance generate $29 billion in revenue in the three months to 30 Jun 2023, and a cash pile of “more than $50 billion”. That, says UMG, has “been built in large part on the music created by our artists and songwriters”.

If the two companies are not able to agree new terms, then Universal’s ultimate gambit would be to pull its entire catalogue - or the most popular tracks in its catalogue - from TikTok. This would leave the platform - and its users - without access to a large number of popular tracks that are widely used in TikTok content around the world. Whether that would ultimately benefit Universal - or harm TikTok - is unclear.

On one hand there is a clear pattern of increased consumption on “premium” music services like Spotify and Apple Music linked to tracks being used on TikTok. However, on the other hand, a Bloomberg study from March 2023 showed that TikTok saw a drop in users in Australia when the platform “limited the music some people could put in their posts” which, said Bloomberg, suggested that TikTok is “still dependent on its access to popular songs”.

Universal clearly believes that music is a core part of TikTok’s value proposition to consumers, saying that “the majority of content on TikTok contains music” and that the platform “is trying to build a music-based business, without paying fair value for the music” it uses.

As part of the negotiations for the onward licence, says Universal, TikTok proposed “a rate that is a fraction of the rate” that it gets from other social media platforms. But this is not just a question of cold hard cash. Or, at least, while it might really be a question of cold hard cash, Universal is prepared to go to war on other fronts to get the money it wants.

Referencing its ‘artist-centric’ drive to “update streaming’s remuneration model and better reward artists for the value they deliver to platforms”, UMG says that there were three key issues that it wanted to be resolved as part of its onward contractual negotiations with TikTok. One of these, online safety, does not directly impact on the amount of money Universal gets, but does have wider implications for both users and Universal artists.

There is no dispute that TikTok has a content moderation problem. In a 2023 article published by The Conversation - a publication that specialises in bringing journalists and academics together - Nuurianti Jalli, a professor of communication studies at Northern State University, said “research has found TikTok has a role in facilitating the spread of hate speed as well as misinformation and disinformation” including “ethnoreligious propaganda”.

TikTok has offered no solutions to this “rising tide of content adjacency issues”, says Universal, going on to argue that alongside widespread copyright infringement - which TikTok seems indifferent to, it claims - there is a “tidal wave of hate speech, bigotry, bullying and harassment on the platform”.

While the heart of Universal’s complaint is money, as with its change to Spotify’s terms, the company is shrewd enough to realise that a multi-billion dollar global music giant shouting loudly about wanting more money is unlikely to get it much sympathy.

With Spotify, Universal shifted the discussion to one of streaming fraud and functional audio - and then successfully pressured Spotify to demonetise millions of tracks created by independent music creators, with no consultation with organisations representing those creators. With Apple Music, the focus is on higher quality music and a ‘bonus’ for labels and artists who provide content as spatial audio.

By using the online safety argument alongside its demands for more money - which includes TikTok putting a stop to AI-generated music diluting the royalty pool - Universal cleverly aligns itself with an issue currently concerning governments, creators and users alike.

If the pay off from its negotiating tactics is more money in Universal’s pockets then artists and shareholders will benefit. Will Universal continue its battle for online safety and reduced “hate speech, bigotry, bullying and harassment” if its negotiations over money are successful? Only time will tell.

ATG // Senior Regional Programmer - Music & Comedy (London)

Ninja Tune // Product Manager (London/Hybrid)

ONE LINERS

Adele, MOBO Awards, Pet Shop Boys + more

DEALS

Believe has acquired Indian music and film company White Hill Music’s Punjabi catalogue. “Punjabi music is not only the second largest Indian genre in terms of market share in India, but it is one of the most popular Indian genres internationally”, says MD of Believe India, Vivek Raina. “It’s been a massive honour to accompany the growth and digitalisation of White Hill Music’s fantastic roster and catalogue since 2017 and I’m now THRILLED to see them join the Believe family for this new page of our common history”.

APPOINTMENTS

Big Machine Label Group has promoted Mike Rittberg to COO and Clay Hunnicutt to EVP Label Operations. “Mike is the consummate professional. He has become incredibly important to the operations of BMLG and is a great co-pilot for our continued growth”, says CEO Scott Borchetta. “Clay has done an exceptional job at elevating the growth and artist development for the Big Machine Records imprint. In his new role, he’s able to take his insights and energies to all of our imprints during this extremely exciting time in our industry”.

LEGAL

The US Register Of Copyrights has begun a review of the designation of the Mechanical Licensing Collective and the Digital Licensee Coordinator, as required under the 2018 Music Modernization Act. Basically it will review the role of the MLC as the administrator of the US compulsory licence for mechanical rights, and the DLC’s role representing the digital services in relation to that licence. "We are confident that this review will confirm that The MLC continues to meet all of the criteria set out in the MMA, while affording us the opportunity to highlight the many successes our team and our stakeholders have achieved since launching The MLC's full operations”, says MLC CEO Kris Ahrend.

ARTIST NEWS

BMG has reportedly ended its partnership with Roger Waters over his controversial statements about Israel, Ukraine and the United States. According to Variety, a publishing deal signed in 2016 has now ended, with CEO Tom Coesfeld having already cancelled plans to release a new solo recording of Pink Floyd’s ‘Dark Side Of The Moon’ last year.

Jake Shears has launched new podcast ‘Queer The Music’. Each episode looks at a different LGBTQ+ artist and one of their songs. Out now are the first two episodes, looking at ‘You Make Me Feel (Mighty Real)’ by Sylvester and ‘I Do This All The Time’ by Self Esteem.

AWARDS

Ghetts, Sugababes and Cristale have joined the list of performers at this year’s MOBO Awards on 9 Feb. Sugababes have also been announced as the recipients of the MOBO Impact Award.

GIGS & FESTIVALS

Adele has announced a four night residency in an 80,000 capacity pop-up stadium in Munich this August. “A one off, bespoke pop-up stadium designed around whatever show I want to put on?” she says in a post on Instagram. “I couldn’t think of a more wonderful way to spend my summer and end this beautiful phase of my life and career”. Tickets go on general sale on 9 Feb.

A Boogie Wit Da Hoodie has announced UK shows in May, including a performance at the O2 Arena in London on 2 May. Tickets go on general sale on Friday.

Aurora and Gabriels have been added to the line-up of this year’s BRITs Week in aid of War Child. You can buy tickets or enter prize draws to win entry here.

Ice-T’s Body Count have announced UK tour dates at the end of June and beginning of July, with shows in London, Manchester and Glasgow.

RELEASES

Pet Shop Boys will release new album ‘Nonetheless’ on 26 Apr, with new single ‘Loneliness’ out now. They’ve also announced five performances at the Royal Opera House in London on 23-27 Jul.

Paramore have released a cover of Talking Heads’ ‘Burning Down The House’. The band also have a collaboration with SZA in the works, the singer revealed in an Apple Music Q&A.

Becky Hill will release new album ‘Believe Me Now?’ on 31 May. It includes her latest single ‘Never Be Alone’ featuring Sonny Fodera.

Ghetts has released new single ‘Tumbi’. His new album ‘On Purpose, With Purpose’ is out on 23 Feb.

The Breeders have released a cover of Guided By Voices’ ‘Shocker In Gloomtown’ and announced UK tour dates in June. The run of shows included a night at Troxy in London on 25 Jun. Tickets go on general sale on Friday.

BADBADNOTGOOD have released new single ‘Take What’s Given’ featuring Reggie.

Camera Obscura have announced that they will release their first album in over ten years, ‘Look To The East, Look To The West’, on 3 May. Out now is lead single ‘Big Love’.

Ibibio Sound Machine will release new album ‘Pull The Rope’ on 3 May. Out now is new single ‘Got To Be Who U Are’. They’ve also announced UK shows in May, June and November.

Louis Carnell has released a collaboration with Wu-Lu, ‘Eight’, the latest (and eighth) track in his ongoing ‘111’ series.

The Narcotix have released new single ‘The Sun’. Their new album ‘Dying’ is out on 1 Mar.

Op Ed: The F-List's Vick Bain discusses what the industry's next steps should be after yesterday's release of the Misogyny In Music report

This week the Women And Equalities Committee in the UK Parliament published a damning report on misogyny in the music industry. Researcher and consultant Vick Bain has closely followed issues around diversity and inclusion in the music business, through her academic research and industry roles, for many years. She also founded The F-List For Music, a not-for-profit organisation supporting female musicians. Here she considers the report's findings and how the industry should respond.

The publication of the Women And Equalities Committee’s report on Misogyny On Music has been met with strikingly different responses. From one corner there is muted silence from the ‘industry’, ie, labels, publishing companies, agencies, promoters and collecting societies to name but a few. But from the other corner there are cheers of validation, from women in music campaigning initiatives and organisations.

This is not surprising because I have experienced, time and time again, denial and sometimes anger from calling out unacceptable behaviour in music. I have been told data and evidence isn’t true or that, if it is, publicising it is not good for the image of the music industry.

I have experienced personal backlash and blaming and I know I have most definitely been removed from numerous party and event invite lists. Because as a researcher and campaigner you are the bringer of bad news, the holder of the mirror and what we see in its reflection is not nice. In fact, it’s sometimes disturbing, even harrowing, and the messenger often gets shot.

UK government publishes new UK streaming transparency code

The UK government has published a new transparency code that sees streaming services and music companies commit to provide more information to artists and songwriters about how their music is being monetised on digital platforms.

The code, says the Intellectual Property Office, "sets out agreed standards of good practice, forming part of a shared ambition across the music industry to build greater trust in music-maker contracts, streaming licensing deals, royalty payments, usage data, audit rights and communication to music creators. [It] has been developed and agreed by twelve music industry bodies representing music creators, record labels, publishers, digital service providers, distributors and collecting societies".

The Council Of Music Makers, which was involved in negotiating the code, has now called on everyone in the music industry to fully embrace it and "to go above and beyond in providing music-makers with the information they need to properly manage, understand and audit the digital side of their individual music-maker businesses".

The lack of transparency in the digital music business was raised as a key concern during the UK Parliament's inquiry into the economics of music streaming.

In their report, MPs on the Culture, Media & Sport Select Committee stated, "artists and their representatives face a systemic lack of transparency from both music companies and the streaming services that license their works. This exacerbates the inequities of creator remuneration by creating information asymmetries and preventing them from undertaking their right to audit".

The fact that artists, songwriters and their managers lack key information about how digital royalties are calculated and paid had been raised many times before. Streaming is a much more complex business than selling CDs, and the streaming licensing model was developed by a small group of streaming services, record companies, music publishers and collecting societies. The deals agreed in the late 2000s were shrouded in secrecy and little information was shared with the music-making community.

Some streaming services and music companies have made some effort over the years to communicate more information to artists and songwriters. However, such transparency is not the norm, and - many artists and managers would argue - even the best players in the market aren't doing enough. The total lack of consultation - and minimal communications - around the recent changes made by Spotify, Deezer and Apple to their payment models have angered many in the artist and management communities.

The code seeks to address some of these transparency issues and the IPO will continue to convene twice yearly meetings to consider how things are working. For the CMM, there is much more to be done, but the code is a step in the right direction. "Although the commitments in the code are modest", its statement adds, "it provides a framework that can be used to start tackling the ‘systemic lack of transparency’ in music streaming that was identified by the CMS Select Committee in 2021".

Commenting on the code for the government, Culture Secretary Lucy Frazer says, “As technology continues to transform the industry, musicians must be entitled to a clear and simple way of understanding what they can expect to be paid from streaming royalties. I welcome the music industry working together on this and look forward to this code being put into practice".

Jo Twist - CEO of record industry trade group the BPI, which was also involved in negotiating the code - adds, “This landmark agreement, the first of its kind between the creator and rightsholder communities, articulates what good practice looks like in terms of transparency and communication throughout the digital music supply chain. We are proud to have played our part in this collaborative effort, working with government and industry partners to bring this code to fruition".

AIM was also part of the process, representing the views of independent labels. Its COO Gee Davy says: “We welcome the participating streaming platforms’ commitment to aid wider understanding of their models and payments. As well as providing clarity on expected standards for more established players, we expect the code to prove vital for those starting out and growing their business to ensure they are set on the right path from day one. By consulting across the broad independent sector, AIM has ensured that the code should be achievable for all, no matter their scale”.

👉 Get a copy of the full Transparency Code here

Over the next week, CMU will be publishing a more detailed guide to the code itself and viewpoints from some of the organisations involved in negotiating it.

The Year Ahead: Alex Kennedy, Managing Director of Believe UK

Since the start of the year, CMU has been sitting down with key people from across the music industry to discuss their work, key trends and challenges, and what to expect in the year ahead.

Today, Believe UK Managing Director Alex Kennedy looks ahead to Believe's fifteenth anniversary year, and talks market share, artist and label services, and the opportunities for a new age of creativity and discovery opened by artificial intelligence.

Our first CMU Masterclass session for this year The Music Business In 2024 went live yesterday as in-person session, and then later that afternoon as on-demand content. The first in a series of eight, our CMU Masterclasses will continue each Tuesday afternoon at 2.30pm UK / 3.30pm CET / 9.30am US Eastern Time. All eight CMU Masterclasses will be delivered live on Zoom and then made available as on-demand content via the CMU learning platform. Click here for information on all of the upcoming Masterclasses and to book your place.

71% of music creators fear multi-billion dollar music AI business could stop songwriters from earning a living, says new report

The market for AI music tools is expected to increase more than tenfold in the next five years, generating $3 billion in revenues by 2028, according to a new report commissioned by collecting societies GEMA and SACEM. As a result, 27% of music creators will be at risk of losing revenue to generative AI by 2028, which means - while many artists and songwriters are already using AI tools themselves - they also want more protections to be put in place.

The rapid development of generative AI, says GEMA CEO Tobias Holzmüller, "offers enormous economic potential. The works created by [songwriters] are the basis for this revolution. Nevertheless, from the perspective of many music creators, the risks so far outweigh the opportunities. This can only change if we now shape the overall conditions in such a way that everyone involved can participate appropriately in the success of this development".

The report was produced by research company Goldmedia. Citing stats from Market.us and S&P, it estimates that the global market for generative AI - so AI models that generate content - currently brings in around $3.7 billion in revenues.

Of that, approximately 8% comes from music AI platforms, so $300 million. With the estimated ten fold increase to $3 billion by 2028, in a few years time music AI revenues will equal 28% of all the money collected by the music industry's song right collecting societies in 2022.

Artists and songwriters themselves are among those making use of music AI tools. In a survey of 15,000 songwriter and publisher members of GEMA and SESAC, 35% have used AI technology in some way as part of their creative process. Use of such tools differs according to age and genre. 51% of respondents under 35 have made use of AI - and creators making electronic music are most likely to use AI tools, with 54% saying they had already done so.

At the same time, the majority of music creators fear that ever more sophisticated generative AI is ultimately a threat, with 71% admitting they are "afraid that the use of AI for music could lead to music creators no longer being able to make a living from their work".

The report considers which areas of music-making are most threatened by AI. It notes that "companies or businesses looking for more generic music to soundtrack their assets or commercials may already be satisfied with AI-generated music in the future". And within the music industry, artists and labels will likely rely more on AI tools for backing tracks and mastering, inevitably reducing opportunities for session musicians and studio producers.

For the music industry at large, the threats are balanced by opportunities. Although the size of the opportunity does depend to an extent on how AI companies choose to work with the music community. This in turn brings us to the big debate over the copyright obligations of AI companies and whether an AI model can be trained with existing music without getting permission from - and therefore negotiating licences with - the relevant copyright owners.

Unsurprisingly, the vast majority of those surveyed - 90% - believe permission must be sought, and that creators and copyright owners should benefit financially if their music is used to train AI. 95% also said that AI companies should declare what content has been use to train their models and 89% stated that AI-generated tracks should be identified as such.

"The figures in the study show that the estimated damage could be considerable for creators", SACEM CEO Cécile Rap-Veber states. Urging the tech sector to work with the music industry, she adds "we hope to establish a transparent and fair relationship between creators and AI companies".

Meanwhile, on transparency, she references the relevant provisions in the European Union AI Act, and concludes, "we call on the French and German governments not to oppose the implementation of effective transparency requirements for generative AI companies".

👉 Download the full report here

Setlist Podcast: Apple Music’s “spatial audio bonus” favours major labels

Each week CMU's Andy Malt and Chris Cooke take a look back at the last seven days in the music business with a recap of key stories and news.

On this week's show we discuss how Apple Music's "spatial audio bonus" will benefit major labels to the detriment of independent labels and creators, plus the report finding that on average two grassroots music venues per week closed down in the UK in 2023 – and more.

Click here to listen - or find Setlist wherever you get your podcasts.