Europe\u2019s trade association for indie labels, IMPALA, has sided with Universal Music Group in its ongoing dispute with TikTok over fees for licensing music on the social media platform.<\/p>\n
At the same time, IMPALA<\/strong> has also called on streaming services that recently made changes to their royalty payouts to address what it calls the \u201cnegative consequences\u201d of those changes \u2013 namely, Spotify<\/strong> and Deezer<\/strong>\u2019s moves towards an \u201cartist-centric\u201d payout model, and Apple<\/strong>\u2019s changes to payouts that reward music available in spatial audio.<\/p>\n “There is an urgent need to secure fair revenues\u201d from services such as TikTok<\/strong>, said Mark Kitcatt<\/strong>, chair of IMPALA\u2019s streaming group and CEO of Everlasting Records<\/strong> and Popstock Distribuciones<\/strong>.<\/p>\n \u201cIn line with this, IMPALA supports UMG<\/strong>‘s stance on TikTok in relation to valuing music properly. The independent community has adopted a similar approach at various points over the years with other services, from MTV<\/strong> to Apple<\/strong> to YouTube<\/strong>.<\/p>\n “We also reject arguments equating the use of music on TikTok to promotion. There is a huge value gap that must be addressed but, beyond that, an exciting opportunity to explore new ways of generating and sharing revenues.”<\/p>\n In a statement issued Wednesday (April 4), IMPALA commented there is a \u201cneed for services like TikTok to collaborate with the independent music community to achieve fair licensing terms.\u201d<\/p>\n TikTok responded via a spokesperson: “We value the relationships and the licensing agreements we have with the independent music community across Europe. TikTok has always been a licensed service and we’re proud of the successes that independent artists and businesses have found through our platform.<\/p>\n “Since the start of the year we’ve seen significant global hits from artists from a range of genres and countries, from established stars to those just starting out, and this success continues to grow.”<\/p>\n The dispute between UMG and TikTok exploded into public view<\/a> at the end of January, when it emerged that UMG\u2019s recorded music catalog would disappear from the social media platform by the end of the month, with the two sides unable to come to an agreement.<\/p>\n A month later, UMG\u2019s publishing catalog began disappearing<\/a> from TikTok as well.<\/p>\n The rhetoric between the two companies has been heated at times, with UMG saying that \u201cagreements with TikTok have expired because of TikTok\u2019s unwillingness to appropriately compensate artists and songwriters, protect human artists from the harmful effects of AI, and address online safety issues for TikTok\u2019s users.\u201d<\/p>\n For its part, TikTok alleged that \u201cUniversal Music Group has put their own greed above the interests of their artists and songwriters\u2026 Despite Universal\u2019s false narrative and rhetoric, the fact is they have chosen to walk away from the powerful support of a platform with well over a billion users that serves as a free promotional and discovery vehicle for their talent.\u201d<\/p>\n In its statement Wednesday, IMPALA rejected the notion that TikTok should be viewed as a promotional platform for music.<\/p>\n \u201cIt\u2019s a use of music that needs to be remunerated like any other. The question of promotion isn’t relevant,\u201d said Dan Waite<\/strong>, chair of IMPALA\u2019s digital committee and CEO of Better Noise Music<\/strong>.<\/p>\n \u201cWe wish to see independent labels, rightsholders and artists receive fair pay for usage, and to have terms just as favorable as the largest majors renew their licenses on. Working together to better remunerate labels and artists across the whole industry is key. We urge TikTok and other services to respect this principle across the board.\u201d<\/p>\n IMPALA\u2019s support of UMG makes it the latest in a growing line of indie labels and trade associations to back UMG in its standoff with TikTok.<\/p>\n In a February guest column<\/a> for MBW, Dr. Richard James Burgess<\/strong>, President and CEO of the American Association of Independent Music<\/strong> (A2IM<\/strong>), explained the thinking behind his group\u2019s backing of UMG.<\/p>\n \u201cMusic has been foundational in building and popularizing platforms like TikTok (formerly known as Musical.ly), contributing significantly to their growth and user engagement,\u201d Burgess wrote.<\/p>\n \u201cYet, this investment by the music industry has not been rewarded with equitable financial returns. In an industry that systemically underpays artists and labels, TikTok\u2019s payment methodology is uniquely disadvantageous.\u201d<\/p>\n He added: \u201cThe folly here for the music industry lies in sacrificing essential revenue from recorded music for the sake of promotion, exposure, or discoverability.\u201d<\/p>\n \u201cIt\u2019s a use of music that needs to be remunerated like any other. The question of promotion isn’t relevant.\u201d<\/p>\n Dan Waite, IMPALA, Better Noise Music<\/span><\/p><\/blockquote>\n Yet not everyone in the music industry feels they have been given a raw deal by TikTok; both Warner Music Group<\/strong> (WMG) CEO Robert Kyncl<\/strong><\/a> and Believe<\/strong> CEO Denis Ladegaillerie<\/strong> have suggested they are satisfied with their licensing deals with TikTok.<\/p>\n However, it\u2019s not known how those deals compare to what TikTok has been offering to UMG.<\/p>\n IMPALA\u2019s latest statement also called on subscription music streaming services \u2013 specifically, Spotify<\/strong>, Deezer<\/strong>, and Apple Music<\/strong> \u2013 to address what the trade group calls the \u201cnegative consequences\u201d of recent changes to their royalty payout models.<\/p>\n Spotify and Deezer recently changed their payment models towards what UMG Chairman and CEO Sir Lucian Grainge<\/strong> has dubbed the \u201cartist-centric\u201d royalty payment model.<\/p>\n Under Deezer\u2019s changes, so far rolled out in France, \u201cprofessional artists\u201d \u2013 those who have a minimum of 1,000 streams<\/strong> per month and a minimum of 500 unique listeners<\/strong> \u2013 receive a so-called \u201cdouble boost\u201d to royalty payments, which gives those tracks double weighting when calculating royalties. A \u201cdouble boost\u201d is also applied to tracks from artists who have been actively searched for by Deezer users.<\/p>\n \u201cWe seek urgent solutions to address manipulation and revenue dilution [but] we also need to make sure the proposals are fair to all, and we hope Merlin’s recent agreement with Deezer will contribute to this objective.”<\/p>\n Dario Drastata, IMPALA, RUNDA<\/span><\/p><\/blockquote>\n So far, UMG<\/a>, WMG<\/a> and Merlin<\/strong><\/a> are among those who have signed on to Deezer\u2019s artist-centric model.<\/p>\n Soon thereafter, MBW broke the news<\/a> that Spotify is also moving towards something of an artist-centric model. Under its new payment model, now in effect, a track needs to have been listened to at least 1,000 times<\/strong> in the prior 12 months to be counted towards an artist\u2019s streams, and a track also needs to have a certain minimum number of unique listeners.<\/p>\n While the changes are meant to address issues such as streaming fraud and low-quality tracks (both Spotify and Deezer\u2019s changes came with ramped-up efforts to remove<\/a> or penalize<\/a> low-quality tracks), some in the industry have criticized the new payout model for potentially demonetizing music from new or emerging artists.<\/p>\n \u201cWe strongly oppose an unfair \u2018reverse Robin Hood\u2019 system that is centered around taking compensation from rising artists to allocate it to top and established artists,\u201d Believe said last year<\/a>.<\/p>\n \u201cFurther, it is our belief, based on data, that such a system would reduce diversity and discourage creativity.\u201d<\/p>\n “IMPALA supports UMG’s stance on TikTok in relation to valuing music properly… We also reject arguments equating the use of music on TikTok to promotion.”<\/p>\n Mark Kitcatt, IMPALA, Everlasting Records, Popstock Distribuciones<\/span><\/p><\/blockquote>\n IMPALA also named Apple in its statement, likely a reference to Apple\u2019s recently introduced plan to give added weight<\/a> to tracks available in spatial audio when paying out royalties.<\/p>\n \u201cIt\u2019s literally going to take the money out of independent labels and their artists, to benefit the biggest companies in the marketplace,\u201d an unnamed senior exec at an indie record company told the Financial Times<\/em><\/a> earlier this year.<\/p>\n The indie music sector has \u201cfound it hard to justify the expense of creating spatial masters,\u201d the exec added.<\/p>\n Now IMPALA has also voiced concerns about these new payment models, saying that \u201cadjustments can be made\u201d to these models \u201cto avoid harm.\u201d<\/p>\n \u201cWe seek urgent solutions to address manipulation and revenue dilution [but] we also need to make sure the proposals are fair to all, and we hope Merlin’s recent agreement with Deezer will contribute to this objective,\u201d said Dario Drastata<\/strong>, Chair of IMPALA and Head of RUNDA<\/strong>, an indie discographers\u2019 association in the Balkans.<\/p>\n \u201cWe believe for example that there are simple solutions for problems with thresholds that can be plugged in and will continue our constructive discussions with services to explore options. Finding the answers will ensure services are able to further develop opportunities in key markets and genres as well as across multiple languages.\u201d<\/p>\n
\n
\n\u2018Negative consequences\u2019 of new royalty models<\/h6>\n