Earlier this year, Sony Music sued fitness brand Gymshark over use of its recordings in videos on Instagram, TikTok and Facebook. It highlighted an important legal issue: the fact that these services have licensing deals covering user-generated content (UGC) but that those deals do not cover B2B (commercial) usage by brands and businesses. However, TikTok has ambitions to solve this challenge.
“I do think there’s a massive, massive opportunity here. When you look at the sync business or the commercial use of music business, it’s a large business. It’s hundreds of millions of dollar annually,” said TikTok’s global head of music Ole Obermann, during his keynote interview at last week’s Midem Digital Edition conference.
“But we’ve done some back of the envelope math where we look across all of the smaller business accounts and commercial accounts we have on TikTok who are wanting to use music in the videos that they post. And if you run the numbers on that, I think we could make this a billion or even multi-billion dollar business in a very short period of time, just based on the kind of volume we see,” he continued.
“But the issue is that all of those licences have to happen on a one-off basis on both the master recording and the publishing side. And in many cases there may be multiple rightsholders. So what ends up happening more often than not is you miss that moment in time where the account has that special song that they want to use in the heat of the moment, because you just can’t get the rights quickly enough.”
What can his company do about this? “We have a big team working at TikTok trying to figure out ways that we could partner up with the rightsholders on both sides, publishing and master, in order to just make these clearances faster and easier and more user-friendly,” said Obermann. “Pre-cleared or auction marketplace, there are a few things we’re working on there. I’m really bullish actually that we will get to a point where we can help unlock a lot of additional value based on commercial use of music in the future.”
Obermann was also bullish about TikTok’s ability to help artists sell merchandise. “We’ve done a few tests working with some of the label partners. A couple of big name artists in the US: Billie Eilish, Lizzo, where we were able to link the artist TikTok account to a commerce page in order to promote a pre-order of an upcoming release,” he said.
“So these were physical products that were actually being sold, and the numbers were very, very impressive. Many, many, many thousands of units within a very short period of time that we were able to see the click-through to. So we’re going to keep building that functionality out,” added Obermann.
“We think merch on the back of livestreaming, we think physical products, perhaps even digital subscriptions et cetera. We’re going to work on all that because we want to create together with the label and the artist partners a marketplace where the artists can figure out how to work with the audience, and then also make money by offering various products and goods.”