UMG vs TikTok

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Hey! On this week’s episode, we opened the mailbag to hear directly from you. Listeners sent me a bunch of voice messages with their questions on important topics in the industry.

I decided that less is more, so I only answered three questions on the show:

1. Thoughts on UMG vs TikTok?
2. Children’s music business?
3. Why Verizon paid Beyoncé

I spent most of the time on #1, the elephant in the room. You can listen to the episode here or read a few highlights from that below.

Why UMG stands firm

It has now been two and a half years since Universal Music Group went public. This was September 2021. It was peak pandemic, peak zero-interest rate phenomena, peak streaming growth, and peak “.eth” in your social media handle.

Expectations were sky-high, especially from the company’s new owners. Bill Ackman’s Pershing Square Holdings bought a 10% stake in the company. Pershing’s 2022 annual report said that UMG:

It’s high praise, but praise that’s conditional on maximizing shareholder value. That’s not to say that Vivendi, the French conglomerate that previously owned 100% of UMG, wasn’t concerned about its value, but Vivendi has been a major stakeholder for nearly 20 years when UMG was worth a fraction of what it is worth today. It had far less urgency than an activist investor like Ackman.

Since UMG's public offering, the following moves have happened:

• most of the major DSPs have increased rates from $9.99 to $10.99 per month in developed markets
• Spotify introduced 1,000 stream thresholds for track monetization eligibility
• Spotify announced plans to modernize monetization for functional music (aka “whale sounds”)
• UMG laid off ~50 employees in Q1 2024. UMG has restructured its umbrella sub-labels into “UMG East” and “UMG West”
• UMG has made a public push for an artist-centric payout model from streaming
• There’s an industry-wide focus on customer segmentation and more focus on “superfans”
• UMG has pulled its music from TikTok

This is a non-exhaustive list, but they’re all connected. The company’s new ownership, plus the streaming growth slowdown, plus a post-pandemic reset across the board, have put more pressure on UMG and its various partners to play ball.

UMG's issues with TikTok aren’t new, but the new owners are less likely to play ball, especially considering the power that UMG has as the rightsholder. This isn’t like Warner Music Group pulling its music off of YouTube in 2009 for nine months. The major record labels are in a much stronger position today, and YouTube wasn’t in the middle of geopolitical turmoil, growth slowdown in the US, and growing competition.

This debate won’t end anytime soon. If either side bends the knee anytime soon, it’s more likely to be ByteDance (or its new US owner for TikTok). It definitely won’t be the major record company.

In the rest of the episode, I went in more depth on:

• the UMG artists who matter most on TikTok
• why some UMG songs can still be heard on TikTok
• and other topics discussed, like the future of kids' music, and Beyonce-Verizon

You can listen here or wherever you get podcasts!

Chartmetric stat of the week

If you're a parent of a young kid, you probably know the Bluey theme song by heart. Well, in November and December 2023, the official Bluey account on Spotify averaged just over 920,000 monthly active listeners. That number has jumped to over 1.4 million listeners as of March 19. That lines up with the release of 10 episodes of Bluey on January 12 on Disney+! The Bluey popularity train continues.

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