TikTok and NMPA Reach a Global Partnership Agreement: Exclusive

David Israelite
Courtesy of NMPA

David Israelite

"This agreement respects the work of creators and gives them a way to be paid for their essential contributions to the platform," says NMPA chief David Israelite.

TikTok and the National Music Publishers' Association (NMPA) have signed a multi-year agreement ending a lengthy standoff with threats of legal action against the popular video-sharing app for copyright infringement.

According to a joint statement, the deal "accounts for TikTok's past use of musical works and sets up a forward-looking partnership." It also establishes its legal legitimacy within the music industry, where it has grown to become a widely successful A&R and marketing tool.

On TikTok, users upload short video clips set to music from the in-app catalog, often participating in dance challenges and other viral trends

The agreement will allow NMPA members to opt-in to a licensing framework to benefit from use of their works on TikTok and is effective retroactively as of May 1, 2020.

"TikTok is proud to partner with music publishers and songwriters to enable artist and song discovery, and support revenue opportunities. We're excited to partner with the NMPA to bring their member companies on to the platform and help hundreds of millions of people discover and enjoy their songs," Ole Obermann, global head of music at TikTok, said in a statement. "We look forward to continuing to work with songwriters to help them use TikTok as a powerful and innovative channel to reach a global audience through a unique format of creation and engagement."

The agreement came after the NMPA urged Congress last year to investigate TikTok over potential copyright theft. At the time, NMPA president and CEO David Israelite sent a letter to Sen. Marco Rubio asking him and other legislators to take action, arguing, "the scale of TikTok's copyright infringement in the U.S. is likely considerable and deserves scrutiny."

Now that the multi-year deal has been reached, Israelite says he is pleased they have been able to work together to come up with a "way forward with TikTok which benefits songwriters and publishers and offers them critical compensation for their work."

"This agreement respects the work of creators and gives them a way to be paid for their essential contributions to the platform," said Israelite in a statement to Billboard.

The agreement will work to "enrich users' experience and the creators of the music made available by the platform by helping them to get their music seen on a canvas with unlimited avenues for expression," according to the joint statement.

As Billboard reported in March, TikTok has been operating with short-term licensing deals with Universal Music Group, Sony Music and Warner Music Group, but only with the latter two's publishing entities -- Sony's Sony/ATV and WMG's Warner Chappell. And while TikTok has deals with indies including Kobalt, BMG, eOne, Secretly Publishing and more than 8,000 others -- many administered through Music Reports -- many of those were passed down from parent company ByteDance's $800 million Musical.ly acquisition in November 2017.

Most notably, TikTok was operating without any agreement in place with Universal Music Group Publishing -- one of the top two publishers in the world -- after its grandfathered deal expired more than a year ago. It also did not have deals with such leading independents as Big Machine and Big Deal Music. These companies are all NMPA members and now may opt-in.

TikTok has grown massively in popularity and value over the past year, since helping launch Lil Nas X's "Old Town Road" to record-breaking success atop the Billboard Hot 100 chart. And the coronavirus pandemic has been boom times for the app: It generated the most downloads for any app ever in a quarter during the first three months of 2020 with more than 315 million installs across the App Store and Google Play, according to analytics firm Sensor Tower, and crossed the 2 billion milestone earlier this year.

But outside of turning new and old songs into viral hits, boosting plays on streaming services like Spotify and Apple Music, the music industry is still watching TikTok's business model to see if the app itself will come to generate revenue for rights holders.

While a paid influencer-based ecosystem around TikTok is building new stars on the platform, so far most of the company's revenue has been generated in China through in-app purchases and advertising, according to Sensor Tower. In 2019, TikTok pulled in over $176 million in revenue in 2019, according to Sensor Tower, but only $36 million came from U.S.-based users. In comparison, Twitter -- which has 152 million daily active users -- earned in $3.46 billion in revenue in 2019.

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