Warner Music Group CEO Robert Kyncl has addressed the breakdown in relations between Universal Music Group and TikTok.
The WMG leader spoke about the row during the Warner Music earnings call. Last week UMG’s recordings were pulled from TikTok after the major was unable to agree terms on a new licensing agreement.
A war of words ensued that made headlines as UMG accused TikTok of trying to “bully” them into a deal, while the major was accused of “greed” by the platform.
Since then, other executives and organisations have weighed in to support UMG, particularly over the suggestion that labels should be grateful for promotional support.
Kyncl didn’t take a side, but he has got an interest in seeing the matter settled. If UMPG publishing repertoire starts coming down from TikTok later this month, then other labels will be drawn into the dispute.
He also expressed familiarity with the scenario based on his previous role at YouTube.
“I don't know the details of their dispute,” said Kyncl on the fiscal Q1 earnings call. “What I can tell you is I have a pretty unique experience of this, obviously having been on the other side and having gone through these types of disputes where content has come down. So I know exactly what Lucian [Grainge, UMG CEO & chairman] and Shou [Zi Chew, TikTok CEO] are feeling – I've gone through all of those feelings multiple times. It is not great for either side obviously because I think everybody wants to consummate a deal.
“The thing that I can tell you is that I know both really well, and I'm confident that they will at some point find an agreement, because from the YouTube experience, music is incredibly helpful to the vitality of content. People when they're creating content, they love music, that's what helps it significantly. Obviously that's valuable to a platform. Conversely, TikTok, YouTube, Reels, all of those platforms are obviously helpful to making music popular. We all love that on the music side. User engagement is great.
“So there are mutual benefits here and it's just about what is the right fair-value exchange. And sometimes you have to go through the price discovery and pull this kind of a step, and that’s okay too, because people find out exactly what it is and what it means for them. Obviously I have an interest in them working it out, I want them to work it out and I think they're both reasonable people that will find a compromise.”
Kyncl also addresses the WMG deal signed with TikTok last summer.
“As far as our deal, I’m always very confident in the deals that we do,” he said. “We don’t follow other companies. We don’t do carbon copies of other deals, we do our own, which is why we did the one last year.
"It wasn't easy with TikTok, our deal was very difficult too, but we got there and, for us, it was fair, but it was a year ago. It was also a different time. So I don’t know what is driving Universal’s positions, but if there’s any way we can help them, we will, all of us, and I’m confident they’ll sort it out.”
While UMG’s statement noted the minimal contribution to overall revenue from TikTok, WMG CFO Bryan Castellani said that its agreement had "certainly contributed" to the 10% growth in ad-supported revenue in Warner's fiscal Q1.
I want them to work it out and I think they're both reasonable people that will find a compromise
Asked about UMG’s concerns about tools for AI music on TikTok, Kyncl said that it was an issue across multiple platforms, “because the platforms not only have the gen-AI engines, but they are really the place where the content ends up”.
“Our work is focused on making sure that the rules of the road on those platforms respects copyright, and we have a lot of copyrights,” he said. “Universal has a lot of copyright. Sony has a lot of copyright, and many others, Disney, etc. So it’s really important to have clear rules of the road, not only for the first-party content that they’re creating with their tools, but even more importantly, for content that is created with other tools that end up there.”
He described the issue of respect for copyright as a “top area of priority” for Warner Music.
Warner Music announced 10% staff cuts following the Q1 results, which showed revenue up 15.9% in constant current. The savings made from job cuts in owned & operated media properties, corporate and various support functions will be re-invested in music.
During the earnings call, Kyncl also reflected on the positive impact since he started a year ago, when he highlighted issues around the value of music on DSPs and the remuneration model. There have since been streaming price rises with no noticeable impact on subscriber numbers. Spotify has revealed that it paid the music industry more than $9 billion in 2023, a figure that has nearly tripled over the past six years.
“A year ago we were just talking about things and today we've got a full round of price increases by all the important DSPs, and we have new artist-focused models around the actual remuneration – the initial stages of it,” he said. “So it's incredible to see the progress in a short amount of time.
“I think what you will see is continued progress on this from both sides, I am very focused on this. I spend a lot of time working on it with the team and our DSP partners. Pricing overall is a very large opportunity for the industry, and we just need to do it responsibly so that we maintain growth together with our DSP partners.
“The way that I talk about it is that we should be not only hunting but we should also be harvesting. The industry obviously has focused on growth over the last 15 years and was only hunting. We just need to do both of those things in different markets and be much more intentional about that.”