TikTok just gained a major partner in Warner Music Group (WMG) at a time when the industry’s major record labels are calling on streaming services to improve royalty payouts for artists and rights holders. Meanwhile, content creators like music reviewers and reactors are left wondering if the deal will alleviate some tension over copyright strikes—as major record labels like Warner Music Group have a history of demonetizing creators on platforms like YouTube, despite these creators contributing to the hype machine surrounding new releases.
On its face, TikTok’s multiyear deal with Warner Music (the financial terms of which were not disclosed) will, in theory, give TikTok creators improved access to the catalogs from Warner Music and Warner Chappell Music to use on their TikTok videos and in CapCut, the editing platform owned by TikTok’s parent company ByteDance, without worrying about copyright violations.
But the landscape for record labels pursuing copyright claims against creators remains highly contentious, and it remains too early to see how—or if—the revenue generated from the TikTok–WMG partnership will trickle down to the creators who are making music clips from the Warner Music catalog go viral on the platform.
Copystrikes and the Contentious Relationship Between Creators and Record Labels
Copyright complaints and takedowns, typically referred to as copystrikes, are de rigueur on video-sharing platforms like YouTube. Though copyright law is meant to help protect artists, record labels have been able to weaponize these complaints, sometimes in cases that test the limits of fair use, in a way that especially hurts creators who review content like music, movies, and video games, as well as educational creators teaching viewers how to play a popular guitar lick or edit music on software like Final Cut Pro.
Creators like music critic Glenn Flicker have specifically spoken out against Warner Music Group in the past for trigger-happy claims against music reviews and have urged YouTube to provide clearer policies and instructions about what can and cannot be included in videos under fair use.
The number of copyright complaints on YouTube hit an all-time high last year thanks to Content ID, the copyright flagging tool that YouTube first rolled out in 2007 to automatically detect copyrighted material in users’ videos. The system now allows record labels to upload copyrighted assets like music videos, recordings, and artwork, which will then be used to help the system automatically scour videos on YouTube for potential infringement.
As a result, more than 826 million copyright claims from the Content ID system were made on YouTube videos in the second half of 2022, resulting in more than $9 billion being paid out to rights holders as of Dec. 2022, according to YouTube’s most recent transparency report.
The system isn’t perfect, though, as videos are sometimes erroneously flagged for copyright violation. And for small creators seeking to protect their copyrighted work, not everyone has access to Content ID, as YouTube has limited its system to more than 9,000 rights owners (e.g., record labels, film studios, and publishers) who have “exclusive rights to a substantial body of original material that is frequently uploaded by the YouTube user community,” the company has said.
In comparison, individual videos on TikTok cannot be demonetized (TikTok’s revenue share model is done through a cumulative creator fund rather than ad-share per video, like on YouTube) from a copyright strike. Still, channels can be permanently banned for including copyrighted material in their videos.
Users can pull from TikTok’s music library without the risk of copyright infringement, so potentially, Warner Music Group’s partnership will introduce more options for risk-free content creation for music reviewers, reactors, and viral TikTok dancers.
However, creators are still left with a lot of uncertainty about fair use as part of the fickle relationship with record labels. Each label and each social media platform has widely different policies, and the ecosystem would be much better served by clearer instructions from all parties about what does and doesn’t qualify as fair use.
Revisiting the Streaming Royalty Model
The TikTok-WMG deal also includes a licensing agreement to juice TikTok’s nascent subscription streaming service, TikTok Music, which recently expanded to markets like Australia, Mexico, and Singapore after launching in Indonesia and Brazil.
For WMG, that translates into more opportunities to eke out revenue from TikTok, which has in the past paid record labels an upfront fee to license catalogs without having to pay based on a number of streams or other metrics of success—a model that the labels have been wanting to change, as The Information reported in May.
And with more revenue, the PR line of thinking goes, the record labels will be able to pay its artists more and offer access to additional ways to monetize their fans on TikTok, such as through merchandise, tickets, and other digital products. Whether any additional revenue will trickle down to the average artist or the everyday creators boosting viewership will remain to be seen.
The deal is, however, clearly meant to boost revenue for the respective companies. And neither entity has a good track record for sharing its multi-million dollar revenue with creators. (TikTok Pulse, the company’s revenue-sharing program for creators, hasn’t led to any major paydays, and Warner Music has a history of screwing over artists in numerous ways.)
Pulling From YouTube’s Playbook
Still, TikTok is realizing it can’t risk making enemies with the litigious record labels—especially after the platform earlier this year tried to limit the use of music from the major labels in Australia, drew fierce backlash from the recording industry, and ended up losing users in the country as a result, according to analytics firm Data.ai.
Instead, TikTok is learning it should lean more into its music subscription product and follow more closely the model made popular by YouTube, whose former chief business officer, Robert Kyncl, became the CEO of WMG at the beginning of the year.
During a May 9 earnings call for WMG, Kyncl noted that “user-generated content (UGC) containing copyrighted material was originally viewed as a big threat by media companies” and that his early years at YouTube were spent “fighting many lawsuits around the world” over copyright complaints from record labels and other music rights holders.
Those legal battles cut into the “low tens of millions of dollars” that the UGC content with copyrighted material was making for YouTube until the video giant was able to “[turn] that liability into a $1 billion opportunity in just a handful of years and a multibillion-dollar revenue stream over time” by launching subscription products like YouTube Music, creating a content ID system that automatically detects copyrighted work in YouTube videos, and allowing rights holders to monetize videos containing their music or other copyrighted material.
And in February, Kyncl specifically called on TikTok to follow suit. “We decided that it was important to us, and that’s why we did it,” the WMG CEO said during his first earnings call of YouTube’s decision to launch YouTube Music and improve its relationships with music rights holders. “TikTok needs to do that. It’s the right decision for them to evaluate.”
It appears TikTok’s CEO Shou Chew listened. But to make good on promises to better reward creators for their work, a more equitable copyright monetization ecosystem—one that acknowledges the contributions of the creative laborers that make the music industry possible and doesn’t just benefit the large record labels and social platforms—must be implemented.
Maybe next time, he and Kyncl will start listening to creators too about their copyright and monetization woes and usher in a new era of cooperation between the entertainment companies, social media platforms, and creative laborers that make the music industry possible.