Last week UMG and TikTok failed to reach a new licensing agreement, prompting the major’s music to be pulled from the app and a war of words.
Here, Lickd CEO Paul Sampson argues that a united industry could help bring about an improvement in artist remuneration from tech platforms…
Hot off the press in the past week is the news that UMG and TikTok have failed to reach a new licensing agreement, once again bringing into question the age-old debate around how to ensure that artists receive fair and equitable compensation for their work.
While technology has ushered in new opportunities and innovations, it has also woven a complex network of revenue streams and distribution channels the intricacies of which have created greater challenges for artists in receiving fair pay. Now, more than ever, it is essential that the music industry unites and addresses this issue, ensuring the future livelihoods of musicians and nurturing a thriving creative ecosystem.
In recent decades, the music industry has undergone a profound transformation. The ascent of digital platforms, streaming services, following a period of online piracy, has revolutionised the distribution and consumption of music. While these changes have enhanced global music accessibility, they have also brought forth considerable compensation challenges. One of the most notable transformations being the shift from traditional physical album sales to the realm of streaming.
While streaming platforms offer unparalleled convenience and extensive music catalogues, the income generated per stream is often meagre. This, allied with convoluted and legacy artist/label contracts, leaves many artists grappling with financial hardships, with independent and emerging musicians bearing the brunt of the struggle to secure a viable income source.
The necessity for equitable compensation for artists, however, extends beyond ethical considerations; it is a pivotal factor in ensuring the sustainability of the music industry itself. Musicians invest their passion and years of dedication into refining their skills and crafting music that resonates with global audiences. Despite this commitment, many artists still grapple with financial instability and unpredictability.
In a world where music production costs remain significant and streaming revenues fall short, artists are compelled to diversify their income sources. Live performances, merchandise sales and licensing agreements have become indispensable revenue streams. However, a combination of the Covid pandemic, the economic downturn and the ongoing focus on climate issues has heavily impacted the live music sector, emphasising the critical importance of promptly addressing these compensation concerns.
In order to effect positive change, the industry needs to come together and use its collective influence to make a stand. Incremental moves to try to address the subject of compensation won’t cut it, although some of the existing attempts at creating fairer and more transparent systems have been a step in the right direction.
In order to effect positive change, the industry needs to come together and use its collective influence to make a stand
Paul Sampson
Back in 2021 for instance, SoundCloud implemented a user-centric royalty plan as an alternative to pro rata accounting, a model which would see better outcomes for smaller, independent artists. It was by no means perfect but it acknowledged that there was a problem.
Deezer and UMG also followed suit at the end of last year jointly announcing an artist-centric model designed to better reward the artists and the music that fans value the most. For Lickd and other music tech companies hoping to level the playing field by developing systems that are much fairer to all concerned, we are slowly beginning to see a pathway to equitable remuneration being built.
However, the emphasis is on ‘slowly’. The intention seems to be there but the reality of what is effectively reconstructing a broken system is not happening quickly enough. Every day more and more artists are losing out financially, which is not only damaging their livelihoods but it is robbing both the fans and the industry of huge creative talent.
It is difficult for a platform like TikTok to justify paying significantly lower rates to the music industry than “similarly situated social platforms” (if that is indeed what it is proposing to do) given that it so clearly gained its market share off the back of its roots in music. The fact that it has helped many artists and labels break new music is also fantastic, but not fantastic enough to try and pay a “fraction” of what its competitors pay, if UMG’s claims are to be believed.
What is also true, however, is that how labels, publishers and artists make the most out of the nuances of these platforms and the opportunities at different ends of the UGC spectrum is yet to be fully understood by many in our industry, and there is a long way to go until everyone is fully up to speed.
What we desperately need is to prioritise the focus on longer-term investment and commitment to building a fairer split, and system, for artists which still enables the distribution channels, the publishers and the A&R machines to remain financially viable. The industry needs to come together as a whole to address this problem and come up with a solution, or set of solutions, that works for all – otherwise it will at best operate in silos and, at worst, remain broken.
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