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Music companies threaten to sue TikTok over copyright

The Financial Times logoThe Financial Times 04/04/2020 Anna Nicolaou in New York
a group of people looking at a cell phone © Provided by The Financial Times

A body representing thousands of music publishing companies, including Universal, has threatened to sue video-sharing app TikTok for copyright infringement.

TikTok has soared in popularity as millions of people upload short clips of themselves on the app, often lip-syncing to music. But some music rights-holders say the Chinese-owned company does not have adequate licences for the songs being used in TikTok videos. These rights-holders are now prepared to wage a legal battle with the Beijing-based company, according to four people familiar with the matter. 

David Israelite, chief executive of the National Music Publishers Association, the industry trade body, told the Financial Times that a lawsuit was a “likely future step” as he estimated that more than 50 per cent of the music publishing market was unlicensed with TikTok.

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Universal Music has been in licensing negotiations with TikTok for the past year as the world’s largest music company looks to extract more money from the social media app as its user base balloons. However, Universal Music’s publishing arm still does not have any licensing agreement in place with TikTok. This means that Universal’s songwriters, which includes Billie Eilish, Lady Gaga, Elton John and Taylor Swift, do not get paid royalties when their songs are inserted into TikTok videos. 

The rift comes as TikTok’s influence in music has become more prominent, after the smash hit “Old Town Road” emerged from the short-form video app last year. TikTok’s parent company, ByteDance, has been valued at $75bn and is reportedly planning to go public. ByteDance’s investors include SoftBank and Sequoia Capital. 

Universal Music Publishing is seeking payment for lost royalties in any licensing deal and has given TikTok a deadline of this weekend to respond to their latest proposal, according to people familiar with the matter. Universal is weighing legal action if TikTok does not respond, these people added. 

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“This level of blatant infringement is something that is rarely seen at this scale by a large multinational company,” said one person close to the talks, likening TikTok’s actions to that of Napster. “We feel that we’ve exhausted those [negotiation] efforts. As a last resort, we turn to litigation.”

A TikTok spokesperson said: “We are proud to support the music industry with the thousands of licenses that we have in place. The details of any agreements or discussions between TikTok and our partners are confidential.”

The NMPA, which represents music publishers and songwriters in the US, has previously sued companies including Peloton, Spotify and YouTube, often winning settlement money. Spotify in 2016 agreed to pay about $30m for unpaid royalties to songwriters. Earlier this year Peloton settled with the NMPA for an undisclosed amount of money. 

In the music business, copyrights are dealt with separately on the recorded music side, which represents the actual tracks, and the publishing side, which covers the songwriting. 

Billboard, the trade magazine, on Wednesday reported that TikTok had struck short-term licensing deals with the major record labels: Universal, Sony and Warner. However, Universal Music’s agreement with TikTok, which covers the recorded side of its music, only covers a fraction of its catalogue and expires soon, according to three people familiar with the matter.

Online streaming has revived the music business, funnelling billions back to the big music labels. These companies fiercely protect their share of the streaming riches through high stakes licensing negotiations with Spotify, Apple, Google, and others. 

ByteDance is separately in talks with the music companies to include their songs in a paid music streaming service, called Resso, which the company has launched in India and eventually wants to expand to the US and other territories.


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