Blink your eyes, and a new social media platform pops up. And with it, a new set of questions for the professional musician, and a new set of variables to complicate an already treacherous territory of the music business.
The TikTok app was launched in 2017, and was intended for markets outside of the communist regime of the People’s Republic of China. Its users create videos that are between 15 seconds and 1 minute in length, and run from short lip-syncing to popular music, comedy, talent videos, political soapboxing, and public revelations of personal and intimate details.
Musical.ly was a social media video platform based in Shanghai with an office in Santa Monica, California, that allowed users to create short lip-sync and comedy videos. Its official release was on August 2014. In November 2017, ByteDance paid approximately $1 billion to purchase Musical.ly. In an attempt to leverage the US digital platform’s young user base, TikTok merged with Musical.ly in August 2018 to create a larger video community, with existing accounts and data consolidated into the TikTok app.
To say that TikTok is a success is an understatement. The app grossed $176.9 million in 2019 (71% of its all-time total of $247.6 million. $88.5 million of which was earned in the 4th quarter of 2019 alone, a jump of over 300%). By September 2019, ByteDance’ gross revenue was estimated at $7 to $8.4 billion (50-60 billion yuan). By October 2019, TikTok had a record 3.8 million first-time downloads. They process 50 million GB of data daily, analyzes its 500 million users’ video clips, and has potential applications for content recommendation, object recognition, and surveillance. ByteDance has been called the world’s most valuable startup. Bloomberg recently valued it at $75 billion; three times more than Spotify’s current market value.
So, a social media platform that people use to post short videos of lip-syncing and / or twerking to ghettoknowme, talking dogs, crying over breakups, and expressing their love or hate of Donald Trump is making a ton of money for a privately owned corporation with ties to the most powerful communist nation on earth. How does this affect the professional musician?
All of the music available on the platform is legal to use in user’s videos. Royalties are paid and the music is licensed TikTok secured licensing deals with different rights holders in the industry, from labels to publishing platforms like TuneCore and, more recently, CDBaby, and pays to use their catalogs. The money is then distributed back to the songwriters in the form of royalties.
TikTok users can load music into the app’s database. And it remains there. Much of it is the kind of homemade hiphop / beats that saturate Soundcloud. Some can be quite sophisticated.
In May 2019, Mary Rahmani, TikTok’s director of music content and artist relations, was quoted in Time magazine as saying “TikTok empowers artists by being an avenue for visual output and creativity. We offer a platform that is creative, collaborative, global and unique.”
This works theoretically, but in practice it’s a different matter. TikTok has inevitably faced allegations about its handling of user data as well as questions about what type of content it will allow on its platform.
Some artists have tried to make good use of the TikTok platform. There is no data available on how many tracks on TikTok are from new or unsigned artists but it’s not hard to believe that it’s a small percentage compared to signed artists. Most people would see no point putting together a lip sync video if nobody has ever heard the track. However, it is a part of the TikTok subculture to act on the assumption that a hit on the platform could act as a catalyst for greater things: the real value of becoming “TikTok famous.”
The app features new and up and coming artists, as well as content from established artists and celebrities (Will Smith, Katy Perry, and Dwayne “The Rock” Johnson are all very popular on TikTok). In return for some publicity on the huge network, TikTok gets to use their tracks for free or a modest sum. Newcomers or unsigned acts might see having a potential audience of close to a billion people as attractive. Getting no payment for their music is considered by many to be an acceptable loss so that the potential audience could lead to a lucrative contract.
However, the music industry is at a stage in which streaming revenue surpassed physical sales, but overall revenue is down. This is in large part because of how much music is available online for free, and because of the unacceptably small royalties paid for streaming. Most musicians must rely on touring, merchandise and side hustles to make a living. This all contributes to the ongoing war over how much artists should be paid across different platforms.
In the February 2019 issue of Pitchfork magazine, Jeff Price, the CEO of Audiam (a company that specializes in licensing, collecting, and distributing royalties from digital platforms) described the dichotomy between the way music and tech companies do business. “The music industry and artists—songwriters and publishers and composers—all traditionally make money off of the sale or license of prerecorded music. Technology companies make their money from valuations on Wall Street or venture capital or private equity, which are based on market share, and that’s based on their number of users. They don’t actually have to make money off of music to make money. It doesn’t matter if they lose money. As a matter of fact, they all lose money.”
Copyright still applies, and musicians are technically required to get paid if their work is used. If a song appears in any TikTok video, the two basic copyrights must legally be observed: the right to public performance, and the right to mechanical reproduction. In the US, statutory damages for breaking either can carry a punishment of up to $150,000 per violation.
The Digital Millennium Copyright Act of 1988, or DMCA was signed into law by the Clinton administration to protect tech companies from potentially damaging copyright claims. The DMCA makes these companies immune from liability for the copyright violations of their users (provided they tell the users not to do it and aren’t aware of individual violations). When artists find a copyright violation, they send the company a DMCA takedown notice.
Many independent labels use collective bargaining deals with major distributors to ensure they’re paid. But the major labels continue to dictate terms and distribute money when negotiating deals with these platforms. In 2016, Warner was the first label to announce they were sharing music with Musical.ly, they did a blanket license known as a buyout: The royalty-holder grants access to a bundle of songs, with a payment up front to distribute however they see fit. This is typical of early arrangements with tech companies.
When tech companies make licensing deals, however, it’s on their own terms. It’s a situation of “sign the contract and make something, or don’t sign and end up with nothing.” And they can still find ways to legally use whatever data or content they want.
Falling in Reverse released a song called “Good Girls Bad Guys” about eight years ago. It had leveled off on every streaming platform. In 2019, someone trimmed the track to its 15-second hook, and it became a hit on TikTok (the number of hits the song had is not clear, but there are dozens of videos on TikTok with that song, and each have thousands of “likes” which indicates a substantial number of plays / streams). They had already granted TikTok permission to use “Good Girls Bad Guys” through their deal with Epitaph Records, which licenses the band’s catalog via Warner Brothers’ Alternative Distribution Alliance. By December 2019, TikTok’s total payout to Epitaph, through their distributor, was a total of $1,500, with half going to the band. For reasons this author is unable to explain, Ronnie Radke, the band’s leader was pleased with these results.
One of the most interesting things about TikTok is how inventive people get with the platform and its constraints. There’s no argument that it’s a fertile platform for creativity. But as ByteDance expands, it will be important to make sure the musicians at the heart of its business model don’t – as has happened all too often in the past when new music reproduction and distribution technology emerged – get the short end of the stick. In the case of the artists who have seen their songs take off in ways they never expected, the question inevitably arises whether giving them a platform, with little or no financial remuneration, is enough.
While the prospect of expanding an artist’s audience is always attractive and has indisputable value, the fact remains that the platform, in this case, TikTok / ByteDance, is earning immense profits from the work and intellectual property of musicians. No other business would find this acceptable. There is a lot of money on the table: the abstract and intangible remuneration of “exposure” cannot be regarded as acceptable currency.