If you know me, then you know that my career started in the music industry—still on the marketing & promotions side, but in music nonetheless. From there, I moved on to digital marketing experiences, eventually including social, and finally taking all of my learned expertise and integrating culture into all things industry. That’s why when I heard about the conflict between Universal Music Group [UMG] and TikTok I was automatically to learn more… and let’s just say this, I’ve seen something like this before. Many times.

A synopsis of the problem

At its core, UMG & TikTok got into a fight over licensing as the previous agreement they had came to an end on January 31, 2024. Since they couldn’t agree on terms, UMG pulled their catalog from the social media platform on February 1st changing the content—past, present, and future—for many users.

If you ask UMG why they took their music off of the platform, they would likely point to their open letter, wherein they point to issues such as disagreements over compensation, artificial intelligence, infringing works, and harassment as reasons to leave.

On the other hand, TikTok replied in its own statement charging UMG with putting forth a false narrative while noting its disappointment in the music giant putting its own greed above the interests of its artists and songwriters. TikTok also chose this moment to mention its “artist-first” platform as a good tool for “free promotion” and a discovery engine for music.

Clearly and unsurprisingly, each entity has its own side of the story. However, before we go further into the potential consequences, let’s look closer at all of the parties involved.

The big, strong behemoth

The main aspect contributing to the attention garnered by this situation is the literal size of UMG. Not only will you find artists such as SZA, Taylor Swift, or Drake affiliated with this company, but they possess 37.5% of the music industry’s market share. In other words, more than 1 out of every 3 songs you hear earns money for UMG.

This is an incredible slice of any industry’s pie, even more so in the business of music. Having a plurality of a market can easily be perceived as a reason to believe you have the upper hand when negotiating your own product. In addition, if the reasons they stated are to be believed, UMG should be protective of their and their artists’ and songwriters’ IP.

Once again, that is if you believe that that is their reasoning behind pulling away from such a popular social media channel.

The People’s “Champion”

Obviously, you’re aware of TikTok. The platform that debuted in 2016 has been downloaded globally almost 5 billion times and only took about 5 years to reach the 1 billion MAU mark. Its quick and continuous growth has proven its status as a place to find the newest content and culture creators.

Moreover, its access to music was (and to a certain extent still is) one of its greatest strengths in the social space. Granted, users on other platforms would often share music. But, because those platforms did not have licensing deals like the ones TikTok had, those users were vulnerable to copyright strikes, DMCA claims, and other restrictions that could affect the users' ability to make money or publish content on those channels. By the way, UMG is very well known for reclaiming content on these channels—mainly on YouTube.

When TikTok posted its statement, its claim regarding its prowess as a discovery engine and music promotion held a ton of validity. Songs old and new were consistently [re]discovered, shared, mimicked, and dueted to the joy and chagrin of many. Music was a superpower that TikTok had, not that they don’t have it anymore, but losing UMG is a blow to its primary advantage.

Leviathan has entered the chat

Chances are you’ve heard of this company, especially if you’re into business, video games, or WeChat. Headquartered in Shenzhen, China, this multinational conglomerate is one of the highest-grossing multimedia companies in the world. You may be asking this, though, what in the blue hell are they doing here?

Well, while researching UMG, I learned that the global leviathan, who owns TikTok predecessor and rival, Douyin, upped its stake in the music group from about 10% to almost 20%. Naturally, the earlier deal between Tencent and UMG did not stop any concurrent licensing deals with other competitors. Nevertheless, its partnership with UMG adds an interesting twist to this situation. Or all of this can simply be a coincidence. Only time will tell.

All things in situ: modus interruptus

As I mentioned earlier, both TikTok and UMG have made points at face value. As I’ve also mentioned, I’ve seen something like this before—technology disrupting the music industry.

What I saw in the mid-to-late 90’s (yes, I’m that old) started with a lack of trust in the music industry. Predatory contracts for artists, an inability to identify artists to push and develop without them already proving themselves, and not understanding the difference between music piracy and promotion put labels in a bad light.

Similarly, technology completely changed how music was delivered to the consumer. The ability to download music flipped the product distribution model and record labels tried to fight it instead of learning how to integrate. Add an ineptitude around identifying and staying in tune with trends, and keeping up with culture, the ultimate result was the labels losing big because they didn’t want to evolve in time.

This time around, some of those shortcomings shown by the music industry have reared their ugly heads. There have been plenty of whispers about record companies trying to create “TikTok songs” for awareness and quick sales. Yet, this approach can create a turnstile effect for artists in and out of the industry without development and a sustainable future. Furthermore, with the proliferation of the 360 deal, record companies are likely to keep a closer eye on the money exchanging hands since they’re not making the money they were making back in the day.

Conversely, TikTok has also had its issues with celebrating its users correctly. On the music side, AI-generated music is a legitimate concern for labels, artists, and songwriters. The fact that TikTok does not seem to have an answer that satisfies people contributes to an erosion of trust that is only reinforced by the platform’s transformation into an Amazon-like shopping mall.

To everyone else, it does appear as if both sides are acting in their own interests while trying to make it look like they are defending those who will be affected most in the end. Technology won big the last time, but can it do so today? The short answer is yet, but not necessarily where you think.

What’s [potentially] on deck

Conversations about the “creator economy” continue to grow nowadays. The dilemma with that nomenclature is, in large part, due to its positioning in a system that likes the controls found in T’s & C’s that lend ownership of content to the platform instead of the artist. This sounds remarkably similar to old-school recording contracts and we’ve seen how that system was shattered.

In addition, huge megastar artists will be fine. But the UMG artists on the come-up have lost a major promotion generator. Unfortunately, their affiliation with a giant music company has handcuffed their ability to grow via no fault of their own. If UMG wants people to believe that they are working in the best interests of their creators, they will have to show it through ways that don’t cost more than these creators were spending in the short and long term.

As we know, one of the most impactful things that technology has enabled is the capacity for individuals to bypass or circumvent old-school gatekeepers and find fans or form a community on their own. Creators no longer have to only be creators. They can become masters of their own domain if they discover the methods to do so. The creator economy is not only growing, it is evolving and businesses still connected to old systems of ownership must pay attention. The balance of ownership can and will shift.

Why does any of this matter

Music is one of the greatest connectors in history. Its power to spark awe, affect moods, help mental well-being, and attach people culturally makes it one of the most dominant forces in society. Thus, disrupting its creation or consumption is not met with positive sentiment. And, this is why we can use the business of music as an illustration that stretches across all industries that have people buying goods and services.

As technology continues to move faster than established systems of business, older versions of industry are clamoring to find fusion points to leverage their waning authority. The music industry found a way to survive through massive change, but they’ve yet to fully decipher a manner in which they can genuinely support their creators through more equitable methods.

Keep in mind, that these social platforms aren’t much better in performing fairness when it comes to business with creators. In a sense, social media was the first level of decentralization—breaking old systems of distribution. Yet, social media channels found a way to recentralize the ownership of content in their own favor temporarily transferring financial power to the establishment. Still, innovation has proven that when an industry tries to leverage or own content, the art finds a new way to spread to the people.

Music was the first example of the shrinking of businesses’ perceived power and the growth of the consumers’ actual power when the product moved from cassettes, records, and CDs to the 1s and 0s of the internet. There is a lesson to be learned and followed here, for all businesses no matter the vertical.

History is not simply the study of the past. It is an explanation of the present. Distribution of a product is critical and can be costly. Nevertheless, it is necessary to respect the fact that people have a talent for finding, appreciating, and connecting with the creator of the product, and the more meaningful a product is to a consumer, the stronger the connection. In industries where cultural connection is a priority, giving creators pennies on the dollar is not good for business long-term because when change comes it is swift and hard.

Creators can become owners of their own IP with platforms like Patreon and systems like Web 3, diminishing companies that perform business the old way to unnecessary middlemen in the business funnel. The key is not to fight inevitable change, it’s to learn how to be a part of the change. Music, print media, and advertising were all business colossuses at one point not too long ago.

So, let’s learn from their mistakes and not try to avoid or fight transformation. Let us learn how to flow with and in transformation. The companies that do so will win, and those that don’t will either be forced to change against their own will or become obsolete. History has spoken, and so will the people.