What Is the Value of Music for TikTok?

Last year, TikTok attempted to answer a seemingly simple question: What would TikTok be without music?

In February 2023, the company ran tests in Australia limiting the amount of licensed music some users encountered on the app. TikTok never revealed the results of those tests to the public, but some Australians who had their music libraries limited took to Twitter (now X) to complain. “wtf is up with tiktok removing like half the sounds??? like i swear ive seen SO many tiktoks where the sound has been removed,” tweeted one user. 

The evidence is only anecdotal, but these tweets suggest that having limited access to licensed music did have at least some impact on the user experience in Australia. 

Since its inception, the value of music has been an existential question for TikTok. This comes as no surprise; the company started out as the lipsyncing app Musical.ly, and in its current form, it is one of the most effective music discovery tools in the world. But since the modern-day TikTok launched as a general social media app — one that still features lots of music — the company has struggled to figure out how big a role music should play in their business — and how much they should have to pay for it. 

In the last year or so, TikTok has fought a prolonged battle against Universal Music Group over music licensing rates, AI, and safety concerns, leading to UMG’s three-month boycott of the platform; downsized parts of its music team; shut down the development of TikTok Music, its nascent music streaming app; and, last week, “walked away” from Merlin’s attempts to negotiate a renewed collective license for the 30,000 indie labels and distributors it represents. Instead, citing issues around fraudulent content, TikTok is only pursuing direct deals with Merlin’s member labels. 

The UMG feud in particular seemed to represent a major turning point in TikTok’s perception of the value of music. The stalemate, which lasted from February to May, essentially took the small experiments done in Australia and brought them to a global stage with the world’s single largest catalog. Everyone from stars like Taylor Swift, Billie Eilish, Drake and the Weeknd, down to small artists signed to labels using UMG distributor Virgin, were removed from the platform overnight. If any event would have proved that music had negotiating power over TikTok, it would’ve been this one — but the impact was much more limited than the music biz would have hoped.  

From talking to TikTok users during the UMG feud, many felt that the app experience was largely the same. Rarely, if ever, would anyone find a video on their “For You Page” with muted UMG audio. Whatever unknowable algorithm controls that feed simply adjusted to serve videos with still-available songs instead, seamlessly. The only time a user would notice the difference is if they were making a video themselves and realized they couldn’t find songs from a UMG-affiliated artist.

Plus, UMG artists big and small proved that they still wanted to make content for the app, even though doing so diminished the pressure UMG could put on TikTok to improve their compensation. Some UMG artists played their songs live instead of using the UMG-owned recording. Others would use unauthorized remixes (including sped up, slowed down and mashed up versions) of their UMG-controlled songs. Some ended up striking direct deals with the platform or finding contractual workarounds to skirt the ban, and the final nail in the coffin seemingly came when Taylor Swift’s catalog suddenly came back to TikTok on April 11 —– complete with a special campaign around her then-upcoming album, The Tortured Poets Department.

When the two companies finally reached a deal three weeks later, just before UMG’s next earnings call, UMG chairman/CEO Lucian Grainge spoke triumphantly about the new TikTok deal. “This new chapter in our relationship with TikTok focuses on the value of music, the primacy of human artistry and the welfare of the creative community,” Grainge said. It’s quite possible that, with the new deal, UMG extracted many of the concessions that it wanted from TikTok. 

Still, overall, the effects of the three-month standoff were pretty limited: many TikTok users didn’t notice a change, while UMG’s stream count went unaffected. The key takeaway is that artists, desperate for promotion, would still make musical content for the app for free, even if it infringed on their own unlicensed copyrights. It became a race to the bottom, like so many other things in music. 

So it comes as little surprise that when Merlin’s TikTok license came up for renegotiation, TikTok played hardball —– or rather, TikTok just refused to play ball with Merlin altogether. 

Instead, TikTok wants to license its 30,000 indie record label members individually — a move which Merlin sees as an attempt to “fractionalize” members to “minimize” licensing costs, according to a letter Merlin sent to its labels last week. 

The whole idea of Merlin — which says it represents 15% of music repertoire globally — is for these small, individual labels to be able to band together and negotiate deal terms with digital partners that are at least in the same neighborhood as their bigger major label brethren. Antitrust laws prevent Merlin from telling its members what to do, meaning TikTok is technically free to negotiate individually and bypass their coalition. Even if Merlin could pull such a move to band together its membership against TikTok, it’s hard to imagine a boycott of indie music going any better than UMG’s.

Optically, it’s one thing for TikTok to stand up to the biggest music company in the world and argue that UMG had put their own greed above the interests of their artists and songwriters” in an attempt to lower the rates it had to pay the label. It’s another entirely for the app, which has over a billion users, to lowball the little guys.

Overshadowing all of this, of course, is the fact that TikTok’s corporate parent Bytedance is in a court battle with the U.S. government that, if it loses, could mean it would be forced to sell its U.S. business. In preparation, TikTok is likely cutting costs wherever it can. Given how tough it is for the music industry to walk away from TikTok, it’s unfortunately one of the easiest places to start. 

So what is the value of music to TikTok? It’s been a moving target throughout the company’s history. In light of recent events, however, I’ll let you be the judge.

This story was published as part of Billboard’s new music technology newsletter ‘Machine Learnings.’ Sign up for ‘Machine Learnings,’ and Billboard’s other newsletters, here.