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We reported yesterday on mounting pressure on TikTok to pay more royalties to music rightsholders. Since that piece was published, more details have emerged on exactly what those music companies are pushing for.

According to Bloomberg, the three major labels all want TikTok to pay them a share of its advertising revenues, as a step on from their existing deals that are due to expire in the coming months.

The downside? These negotiations have been happening at exactly the same time as TikTok has been cutting its revenue projections for 2022. That’s according to a separate report in the Financial Times.

It suggested that TikTok had previously predicted revenues of between $12bn and $14.5bn this year, but that “actual revenue is now believed to be closer to $10bn”. Note, this isn’t all advertising revenues: it includes in-app spending by TikTok users.

(That’s a significant chunk too: estimated at $2.3bn in 2021, and $914.4m in the third quarter of 2022 alone.)

Yesterday, we wondered whether regulatory headaches in other parts of TikTok’s business (safety, privacy, misinformation) might bump music licensing down its priorities list. Now there’s the added complication that rightsholders are pushing for a share of revenues that are falling short of expectations.

But, as we also noted yesterday, music is so core to TikTok – and TikTok so valuable to the music industry in terms of discovery – that there is strong impetus on both sides to get those new deals done.

With, of course, the regulation period of hard-nosed negotiations and strategic media leaks first…

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Music Ally's Head of Insight

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