The Journal. - The Day the Music Died on TikTok

Episode Date: February 7, 2024

Music from major artists like Taylor Swift and The Weeknd has been muted on TikTok after a licensing deal fell apart. WSJ’s Anne Steele breaks down what happened to billions of videos and why the two companies are at loggerheads over the terms of a new deal. Further Reading and Watching: - Bad Blood: Why TikTok Videos With Taylor Swift and Other Universal Artists Are Now Silent  - Universal Music Group Poised to Stop Licensing Music to TikTok  Further Listening: - How TikTok Became the World's Favorite App  Learn more about your ad choices. Visit megaphone.fm/adchoices

Last week, musician Cody Fry noticed that one of his songs was starting to go viral. I was walking in the woods one day It was just all of a sudden it got used in a Chinese reality television program and then maybe a couple celebrities used it in a post, and it was just, like, off to the races. His song, Things You Said, was blowing up. In a single day, almost 800,000 people shared it. To me, the scale was just astronomical. It was mind-blowing.

Right. So we're talking streaming numbers that were more than my whole catalog streams in a day. Cody says that he's had a viral song before, and it massively changed his career. The last time I played in Indianapolis, it was for like 28 people at the White Rabbit Cabaret Club. Now I'm playing Indianapolis in their symphony hall with their orchestra, which is just, so, I mean, it's really hard to overstate the impact these moments can have for an artist because it sort of like grows everything all at once. Do you make money from having songs on TikTok? So my understanding is that I do make a little money from TikTok, but it's not very much.

Cody says that the most he's ever made in one month from TikTok payouts is a couple hundred dollars. Still, when he heard about what was happening with the song, he was thrilled. But just as his numbers were really starting to climb, something unexpected happened. Cody's music vanished from TikTok. I'm pretty sure it happened overnight from the 31st of January to February 1st. I think when I woke up the next day, most videos were muted. I thought, no, this is like the opposite of Christmas morning. Someone came and took away all my gifts.

Oh, you're laughing, but it's like, you know that like, oh gosh. You have to laugh. What can you do? What can you do but laugh? It's just, you have to. Because while there's tons of other artists that have viral tracks, mine was in the upswing, in the exponential growth phase, which is kind of the most important part. You know, I've had a couple viral tracks now, and so I kind of have a sense of how these things go.

And I just, I know that it was doubling. You know, it've had a couple viral tracks now, and so I kind of have a sense of how these things go, and I know that it was doubling. You know, it's just insane numbers, and the takedown occurred at a really tough, tough time. I'll never really get to know what could have happened had the track been allowed to continue on its natural viral course. And so it just kind of feels like all this potential energy that was just wasted. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, February 7th.

It's Wednesday, February 7th. Coming up on the show, why music has been disappearing from TikTok. When it comes to smart water alkaline 9.5 plus pH with antioxidant, there's nothing to overthink. So, while you may be performing mental gymnastics over whether the post-work gym crowd is worth it, if you'll be able to find a spot for your yoga mat, or if that spin instructor will make you late for dinner again, don't overthink how you hydrate.

Life's full of choices. Smart Water Alkaline is a simple one. TikTok has become a huge vehicle for artists and creators. A viral song on the platform can put people on the map. Our colleague Anne Steele covers the music industry. It can start with some random non-famous person.

It can start with an influencer. It can start with an artist themselves. And then, you know, users across TikTok replicate the dance, the trend, whatever it is. And so you have not just one video going viral,

but you have a sound and an aesthetic or a dance itself going viral, and it's replicated across millions and millions of videos and users creating their own version with music in the background. Right. And that song becomes sort of the part of the texture of that trend. Absolutely. Yeah. And often what's driving the trend. One of the more famous ones early on was Old Town Road by Lil Nas X. I mean, I'm also thinking about the Weeknd song that was really, really big.

Blinding Lights. And of course, The Weeknd is already a massive artist, but yes, blinding lights and the dance that went with that was absolutely huge. And what you've seen is even artists thinking about TikTok in their songwriting sessions in the studio. So Olivia Rodrigo has talked about a sort of audible cue that she put into driver's license.

Now I drive alone past your street. Red lights, stop. And she was hoping that that would serve as a place that people would start their snippet there and create their TikToks there, and they absolutely did. And as artists and creators found success on TikTok, record labels saw an opportunity. So the music business has been growing for several years now, thanks largely to revenue from streaming. But as revenue from music streaming sort of starts to plateau and doesn't

have this explosive growth that it's had for many years, the music business is starting to look at where else can we look for revenue growth? So where else can we look for revenue growth beyond these music streaming platforms? And that has mainly been in social media, video games, and fitness apps like Peloton and that sort of thing. Today, the biggest label that TikTok works with is Universal

Music Group. It has some of the world's biggest superstars signed to it. Among them are Taylor Swift, Drake, Billie Eilish, The Weeknd, Eminem. So these are incredibly popular artists who are incredibly popular on digital platforms. Universal also represents many emerging artists, people like Cody Fry, whose song was going viral last week. But for the partnership between TikTok and labels like Universal to work, they have to have licensing agreements, which have expiration dates. And for over a year, the two companies have been trying to negotiate a new contract. And so what does Universal want in a new contract with TikTok?

Universal wants to get paid more for the use of its music. By some calculations, TikTok has been paying out at about a fifth of the rate of the comparable platforms. So Instagram, YouTube Shorts, and Snap. So Universal is saying you should be paying the market rate for this. We need to address this. Right. So from Universal's perspective, it is in their interest to maximize the value of the catalog and get the best licensing deals. It's also a publicly traded company, so it's got to show increasing revenue

not only to artists, but to its investors at this point. So the main issue is money. So obviously, I would say the biggest sticking point here is how much Universal and its artists get paid for use of music on the platform. But another huge issue here is AI,

which is this big, exciting, and scary thing that is taking over every industry. And if you look at the interactivity on TikTok, you can imagine a world where they're looking to have their users not only just take, you just take 15 to 60 second clips of music, but also interact and manipulate or even create new music out of that music. And in that world, Universal wants to make sure that they're getting paid for that. What is TikTok's argument about why they should get a good deal? What is TikTok's argument about why they should get a good deal?

So TikTok's argument is we are this massive platform that is fostering musical discovery and music virality like no one has done before. As you can see, like there have been many songs and many artists that exploded on TikTok before anywhere else. TikTok's argument is that, you know, we are this major, major promotional tool that does ultimately drive, you know, discovery and consumption of this music on other platforms. So TikTok is saying we're big enough that we can sort of dictate some of the terms of this negotiation. saying we're big enough that we can sort of dictate some of the terms of this negotiation.

Absolutely. So TikTok is thinking that they have the leverage. And to some extent they do. That's the big question here is like, who has the most leverage? The negotiations got tense. Universal alleged that TikTok was proposing to pay artists a fraction of the rates that other big social media platforms pay. TikTok responded by calling this a, quote, false narrative. The contract lapsed on January 31st, and by the next day, the music was gone. So what happened is what many people in the music business refer to as the nuclear option.

How much music are we talking about here? Like how many artists or how many videos? It is massive and it's hard to get exact estimates, but Universal is a massive label that has some 40% market share. It's a significant part of popular music. What that means for artists and creators on TikTok. That's next. With Smartwater's pure, crisp taste, there's nothing to overthink.

So while you may be spiraling over double texting your crush, whether your skincare routine is working because you look the same or is doing nothing because you look the same and whatever the heck red light therapy is, it's definitely not that. Don't overthink how you hyd is. It's definitely not that. Don't overthink how you hydrate. Life's full of choices. Smart water is a simple one. This ad was expressly recorded to create a sense of simplicity.

Just a few simple sounds. No complexity. Like Neutral. Made with just vodka, soda and natural flavour. Neutral. Refreshingly simple anything from Taylor Swift Drake, Olivia Rodrigo, Post Malone BTS, gone

and now so many of my videos are muted and it's just me awkwardly dancing to no sound like no sound half of it muted personally I'm going to try to do more voiceovers. I may start singing, you know, I'm just fine. I can't sing. I actually cannot believe that there's no music right now on TikTok. For the past week, billions of videos across TikTok have been silenced. One thing to point out here is that what we've seen so far is just the recorded music side of

what universal controls but what a lot of people have been talking about this week is when the publishing assets start to come down so wait when when you say publishing assets what does that mean so the publishing copyright has to do with the songwriter. So, you know, people joke about 26 songwriters and producers on a number one hit. So when you start to get into the songwriter and publishing copyrights, again, the footprint gets bigger and the tentacles start to reach and affect an even broader base of artists. So I've seen estimates as high as 70 to 80 percent of basically what's on the Billboard Hot 100. TikTok said that it was, quote, sad and disappointing that they put their own greed above the interests of their artists and

songwriters. And, you know, they pointed out there are well over a billion users that they say serves as a free promotional and discovery vehicle for talent. And Universal has just reiterated that it wants its artists to be compensated fairly for their work. How long do you think this deadlock will last? I don't think this is going to be a matter of days. It sounds like the sides are too far apart on how they feel about how this should be resolved that I think we're looking at at least a matter of weeks, if not months here. In the meantime, TikTok creators are changing up how their videos sound,

not using music at all, or even singing the songs themselves. For musicians like Cody Fry, who are waiting for their music to be restored, a resolution can't come fast enough. What would you want to see happen? Like, you know, Universal says that they want to make sure that artists are being compensated fairly for their work on TikTok. Ultimately, do you feel like what's happening now is helping you? Certainly, for me specifically, this takedown has not helped me. It has hurt me. That's for sure. I could see that there would probably be artists in different positions than me who this takedown could help in the long run. And potentially it

could even help me in the long run. Although I must say that I am skeptical that any of this additional negotiated money that UMG can get will make its way down to artists in a significant way, just because at least my understanding is that the amounts they're paying are so small that even a significant percentage increase wouldn't result in that much extra money down at the individual artist level. I definitely understand the positions of both TikTok and Universal, but at the same time, I just feel very small. I feel like an ant at the picnic of these larger entities and I'm just sort of being stomped on in the name of kind of the quote, greater good of like, well, in the future, you'll thank us for like fighting this battle for you um i think the trouble with that is

that you know umg and tiktok are both going to be completely fine uh but it's artists like me who are on the ground just trying to make and promote music we will take the brunt of the hit for this like war between these two companies and so i think if I could say anything to TikTok and UMG, I would just say, get this resolved quickly. Don't, and not at the expense of your people. That's all for today, Wednesday, February 7th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Megan Bobrowski. Thanks for listening. See you tomorrow.