Universal Music Group and TikTok are parting ways as they failed to reach a new agreement on rights usage, a development set to take effect from February 1. This shift has the potential to significantly impact TikTok, given the app’s increasing reliance on music. The breakdown in negotiations stems from disagreements on compensation for artists and concerns about generative AI usage safeguards.

Home to major music icons like Taylor Swift, Adele, Drake, and Billie Eilish, Universal expresses dissatisfaction with TikTok’s offer, claiming it falls short of expectations in artist compensation and protective measures against generative AI.

The current rights agreement, inked in 2021, will conclude on January 31, leading to the removal of all Universal-owned content from TikTok. Universal accuses TikTok of attempting to strong-arm them in negotiations by leveraging its vast audience reach to alter existing payment arrangements.

Universal accuses TikTok of trying to build a music-centric business without paying fair value for the music. TikTok, in response, expresses disappointment over Universal’s departure from a “free promotional and discovery vehicle” for its artists. Despite TikTok maintaining its position publicly, the severance with Universal poses a substantial setback, especially considering TikTok’s recent emphasis on music as a vital aspect of its identity as a music discovery platform.

A commissioned report by TikTok last November highlighted that users on the platform are notably more likely to discover and share new music content. Additionally, 75% of users find new artists through TikTok clips. The app has become a crucial consideration for record labels aiming to showcase their latest talents, and its influence has led to the transformation of careers and alterations to song titles to align with in-app trends.

This dispute reflects the perceived value exchange between TikTok and record labels, with the app potentially seeing itself as more valuable to these labels. The imminent removal of popular music from TikTok is poised to create confusion and frustration among users. While the current scenario suggests a significant impact on both parties, it remains to be seen whether negotiations will resume, leading to a compromise.