CEO of Warner Music Group Robert Kyncl predicted that Universal Music Group and TikTok will eventually settle — allowing UMG's catalog to return to the short-form video platform — on an earnings call Thursday. “I'm sure they'll sign a deal at some point,” Kyncl told analysts.
Reaching a deal with TikTok “wasn't easy,” he added. “Our deal was also very difficult. But we got there and for us it was fair.”
Kyncl emphasized the importance of platforms like TikTok to the music industry in his opening remarks. “The ephemeral nature of music means it's well aligned with data discovery and consumption trends determined by the algorithms of the larger platforms and users sharing playlists with each other,” he said.
“Music is easy for fans to create,” he continued. “Users on the world's biggest social media platforms love using music to soundtrack their own content, further increasing the reach, popularity and popularity of our catalog.”
In response to a question about the UMG dispute with TikTok from Michael Morris, an analyst at Guggenheim Securities, Kyncl was sympathetic to both sides. “I have a very unique experience in this in that I've obviously been on the other side and having been through these kinds of disputes where content has been taken down,” the former YouTube executive said. “I know exactly what both Lucian [Grainge] and Shou [Zi Chew] feel I have been through all these emotions, many times. It's not great for either side, obviously, because I think everybody wants to get the deal done.”
“There are mutual benefits here,” Kyncl added. “The issue is what is the correct fair value exchange.” (He also took an amusing jab at journalism, telling Morris, “whatever you read in the press [about UMG and TikTok]don't believe it.”)
The day before the earnings call, Warner made a shock announcement: It had its biggest quarter ever, but it was cutting 600 employees, or about 10 percent of its workforce. Most of the cuts focused on “owned and operated media properties [like Uproxx and HipHopDX]corporate and various support functions,” Kyncl told staff in an email.
Speaking to analysts, Kyncl stressed that Warner had “laid the groundwork to drive our growth for the next decade” and was “firing on all cylinders in many territories around the world”. He's pleased with both the company's launch — citing upcoming albums from Cardi B, Gunna, Coldplay, Sia and more — and Spotify's decision to adopt a “new rights model that better aligns economics with the quality content it pushes The dedication”.
TikTok's showdown with UMG came up once again during an analyst question Rich Greenfield. Last week, UMG wrote an open letter accusing TikTok of “letting the platform flood with AI-generated recordings – as well as developing tools to enable, promote and encourage AI music creation itself.” platform – and then required a contractual right that would allow that content to massively reduce the pool of rights for human artists, in a move that amounts to nothing less than sponsoring the replacement of the artist by artificial intelligence.”
When Greenfield asked “how [Warner is] dealing with [TikTok] about AI music,” Kyncl noted that this was a major issue across a wide variety of social media platforms. “It's really where the content ends up,” Kyncl. “Our work is focused on making sure the rules of the road on these platforms respect copyright.”
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