When TikTok shared its music report at the tail end of 2021, the company was quick to clarify its position on creators: “Music is at the heart of the TikTok experience. It’s the glue that connects TikTok’s disparate threads, providing a throughline between individuals and communities who bring their own spin to the latest trend.”
The company’s Global Head of Music (Ole Obermann, a former executive for Warner Music Group and Sony Music Entertainment) was especially bullish about its burgeoning position within the global market, adding, “From the Beatles to Sea Shanties, J Balvin to Abba… the last 12 months have provided so many music moments, inspired our community of 1 billion, and shown the world that music starts and lives on TikTok.”
Which is really a roundabout way of saying the music industry should be thanking TikTok for its potent role as a promotional tool, not the other way around. It certainly can’t be written off as a wavering fad by cynics or people who prefer Facebook and Instagram. Not when 67% of teens pledged allegiance to the platform in a Pew Research poll; more than 175 songs hit the Billboard Hot 100 after trending on TikTok last year; and headlines like “The Viral Spiral”, “TikTok Has Changed Music”, and “TikTok is Upending the Music industry” seem to hit the web every week.
If anything, the anxiety of artists and blind faith of labels over TikTok’s potential and the ways in which it’s rewired our brains has reached a fever pitch over the past few years. It has also raised a far more important question: how musicians should be compensated for TikTok’s main draw – user-generated syncs.
Unlike Spotify and other Digital Service Providers (DSPs), TikTok does not follow a familiar business model of paying out performance and mechanical royalties that reflect a creator’s play counts. It’s far more fluid, and figures things out in real-time with rights holders and their representatives — something Music Business Worldwide revealed in its recent wake-up call “Why the Music Industry is Headed for a Tussle with TikTok Over Royalties.”
Here are some common questions about TikTok payments and what we know so far…
What Kind of Royalties Can You Earn on TikTok?
Much like YouTube’s user-generated content, TikTok videos generate micro-sync royalties via multiple sync uses and direct licensing deals. How these royalties are calculated — a divisive process that values market share over metric views — is described in detail here.
One way around a traditional sync license is TikTok’s own SoundOn service, which lets you upload music directly to TikTok and start earning royalties as soon as it is used. Since it’s still in a soft launch phase, the royalty rate is 100% in your first year, and 90% after that, with the option to distribute your work to other DSPs. For a closer look at how SoundOn works, and why it may or may not make sense for your own music, check out Protocol’s hot take here.
Who is Not Eligible to Collect Royalties on TikTok?
If your publisher (or publishing administrator) and/or your distributor does not have a licensing deal in place with TikTok, they won’t be able to collect royalties on your behalf. Here’s an extreme example of how this has already happened in the real world: When Kate Bush’s seminal “Running Up That Hill” single went viral after a prominent Stranger Things placement, it racked up more than 5 billion views on TikTok and didn’t make a dime according to Music Business Worldwide. That’s because her distributor (Warner Music Group) did not have a revenue share or royalty-based agreement with TikTok.
Bush isn’t about to file for bankruptcy though. According to QZ, she owns the copyrights for her original recordings through an independent label called Noble & Brite. “Running Up That Hill” also received a major boost on the streaming front, enough that she reportedly earned $2.3 million in the month after Stranger Things dropped. Unfortunately, this plays right into TikTok’s argument that it’s a way for artists to raise their profile rather than rack up royalties.
Music Business Worldwide founder Tim Ingham tackled this topic on his Talking Trends podcast over the summer, which spoke to several major sources within the music industry. One said this: “Soon TikTok is going to be too big and too powerful for us to force it into a revenue share deal. The last time we let a company of this size and power run away with things without paying us properly… was MTV.”
Obermann countered this concern with a lengthy statement: “We’re delighted by the success artists, both new and old, have found using TikTok; connecting with fans and kick-starting their careers. This success, and the power of our platform, has translated into record label and publishing contracts, the launch of careers, significant streaming uplift and TikTok having a positive impact on charts worldwide.
He continued, “TikTok is a unique service and has pioneered the adoption of short-form video. We’re not a streaming platform and we do not offer a subscription model. We negotiate our licenses on a rolling basis and as engagement with music on TikTok evolves, our business model will also evolve.”
How is Music Licensed on TikTok?
TikTok strikes direct licensing deals with labels, publishers, and distributors on a case-by-case basis. Ingham described these “blind checks” in more detail on his podcast. According to several insiders, they give the social media platform free rein to cannibalize a label, publisher, or distributor’s catalog over the course of a set time period — typically a year or two. Similar to the blanket license deals struck by radio stations, TV networks, and nightclubs, this money is divvied up by distributors, publishers, and labels according to the individual agreements they have with artists.
“One person I spoke to called them ‘buy-outs’,” Ingham said, “because TikTok is effectively buying out music licenses every year or two…. How TikTok users then use that music, how many videos they create using it, how many times those videos are played by the TikTok audience… all of that is irrelevant. The music rights holders have their checks, and TikTok has its music.”
Who is Responsible For Collecting Any Earned Royalties From TikTok?
Licensed music publishers and distributors collect earned royalties from TikTok based on a fixed royalty pool it releases quarterly. For example, Songtrust is paid a portion of the pool based on the proportion of overall TikTok videos created using compositions that we administer. We then distribute those royalties to our clients based on the usage reports TikTok provides us.
If you have any questions about whether you’re eligible to earn and collect TikTok royalties, the best thing to do is simply ask your label, distributor, or publisher. For more information on how to sign up for Songtrust, or receive support as a current Songtrust client, please check out our contact page.
