UMG licensing deal solidifies TikTok’s lead in social media innovation

In September of last year, TikTok was facing a presidential ban in the US. Not five months later, it is hosted by Oracle, a US tech company, and has global licensing deals with Sony Music, Warner Music Group and, as of 8 February 2021, Universal Music Group. After a pandemic boom of adoption and weekly active usage, which more than doubled from Q4 2019 to Q4 2020, TikTok has become an impossible-to-ignore force in entertainment (source: MIDiA Research Consumer Survey Q4 2019/Q4 2020).

With label partners now on board to “experiment with exciting new features” and major catalogue now available for users to utilise on the app, TikTok is moving from a YouTube-esque, “innovate first, apologise later” copyright approach to that of major music industry partner. It makes sense; over the last year, over 70 artists broken on the app have gone on to sign label deals (including the Sea Shanty instigator, Nathan Evans). TikTok is also, according to a statement by UMG, trusted to provide fair remuneration to artists, and is intended to act as a partner in breaking new acts and introducing legacy music to new audiences.

A far way to come in a year. More than simply a tale of individual success, however, TikTok is a sign of the next phase of digital social innovation. While Western music monetisation models have struggled with subscription services, TikTok has broken through with the Asian models of fan monetisation – as exhibited by the willingness of labels to partner with it. Moving into a digital-first saturated attention economy, where competition will only become more ferocious, having a stable model that can sustainably reward creators without undue traditional concerns of churn and free versus paid is a very strong position.

Moreover, social media as a whole in the West has been stagnating. Snapchat and Twitter have not innovated in any significant way since the first few years of their growth to prominence; in fact, Twitter seemingly bet on the wrong horse entirely by purchasing Vine, a very similar short-form social video app to TikTok, back in 2013 – and then promptly shut it down. Facebook, long the dominant social media with Instagram, WhatsApp and its primary Facebook platform, has been a culprit of purely advertiser-centric innovation – and is now ripe for being overthrown by a more consumer-centric competitor. TikTok may not be its direct competitor, but it signifies a demand in the marketplace for such an option.

The behavioural drivers for TikTok usage are simple: free, flexible, multi-media creation tools, a content feed which is not overly curated and enables broad discovery and a short barrier to virality, and a “doom scroll” usage which promotes humour over, well, doom. It enables creators such as musicians to generate meaningful revenues, and promises further “exciting innovation” for users that will likely far outweigh the Facebook idea of shop windows. TikTok has come a long way since the beginning of 2020 – and has much farther yet to go.