As the world’s leading record company, Universal Music Group (UMG) is a key player in the music industry. It represents one-third of the Big Three, the world’s three largest record companies, along with Sony Music and Warner Music Group. Now, Universal Music alone has around 32% of all music on the market and represents many Grammy Award-winning artists such as Taylor Swift, Billie Eilish, Drake, Ariana Grande, and many more.
But as a major music company, it doesn’t just sign new artists and promote existing ones, it is also heavily involved in the business side of the music industry and takes care of things such as handling artist development as well as negotiating licensing deals with online music streaming services and social media platforms… Because of these many roles, Universal Music has a considerable impact on the way music in general is consumed and promoted around the world.
But recently, the record company announced several changes and, as is the case when such a major player makes a series of unexpected moves, the whole game seems to change as a result.
Let’s take a look at the various decisions Universal Music has made recently and the impact they could have on the music industry as a whole.
1. The 10-year agreement with HYBE and utilizing the Weverse platform
Earlier this year, Sir Lucian Grainge, Chairman and CEO of Universal Music Group, announced that the group had signed a long-term agreement with HYBE.
If you’ve never heard of HYBE (formerly Big Hit Entertainment), it’s an entertainment company founded in 2005 and based in South Korea, specializing in the management and promotion of musical artists, particularly in the K-pop industry. In fact, it was the worldwide success of the K-pop group BTS (Bangtan Boys) that really put HYBE on the map.
The agreement signed in March this year provides Universal Music with exclusive distribution rights over HYBE’s music for the next ten years. In return, HYBE’s artists will benefit from UMG’s expertise in international music distribution and marketing, which should help them greatly in their musical careers.
To fully understand the impact this deal could have on the music industry, we also need to mention Weverse, the social media platform created and run by HYBE to help artists foster a more direct connection with their fanbase.
The beauty of this platform is that it allows artists to share exclusive content such as behind-the-scenes footage, communicate directly with fans and listeners via the platform, promote music releases, whether it’s a new single or a brand new album, as well as promote tours and sell merchandise (CDs, cassettes, T-shirts, etc.). The platform also offers a range of monetization opportunities, such as paid events like live streams or virtual meetings.
And now, thanks to this new 10-year agreement, artists signed by UMG will also be able to use this platform and its various promotional tools. On top of this, it will also allow them to tap into a large and active international audience, and give them the opportunity to collaborate with other artists on the platform, including those signed to HYBE (and thus reach listeners who may not already know them).
Now, what does this mean for the music industry as a whole? Well, if it turns out that this system works well for UMG artists, it could inspire other record companies, whether majors like Sony Music and Warner Music Group or independent labels, to seek similar partnerships or even create their own platforms for their artists to connect with their fans.
2. The licensing dispute between Universal Music and TikTok
Another major event recently hit the headlines: the licensing dispute between Universal Music Group and the social media platform TikTok, which led the record company to withdraw its entire music catalog from the video-sharing platform.
Why this decision? Well, it boils down to two major issues on which the two parties have been unable to find common ground, and therefore agree on a new licensing deal.
The first issue is money. UMG believes that TikTok does not fairly compensate artists or songwriters when they use their songs and that it does not pay enough royalties to rights holders.
The second issue relates to concerns about artificial intelligence. Indeed, UMG believes that TikTok has somehow allowed AI music to flood the platform and thus drown out all the man-made music.
But what will become of this tug-of-war between the world’s most popular video-sharing application (it has a billion monthly users!) and the world’s biggest record company? And what does it mean for the music industry?
The truth is that, for now, the two need each other, as TikTok is the most popular social media app in terms of exposure, but in return, it needs access to a large music library to keep its users happy. While Weverse is a great tool for UMG artists to use to promote their music, it can’t completely replace TikTok, as it remains an essential channel through which a song can reach new listeners and even go viral.
What do UMG artists have to say about all this? Despite UMG’s open letter to the artist and the songwriting community explaining the reasons for its action, the artists themselves are not very happy. This is particularly worrying for new and small artists who may not be signed directly by UMG but by one of its smaller music labels, and whose songs have been removed from the social media app due to the lack of a licensing deal.
Only time will tell what happens next, but it seems that this showdown between the two giants will result in a lot of people losing and nobody winning.
3. The new agreement between UMG and Spotify
While UMG and TikTok don’t seem to be getting on, the record company is getting much closer to Spotify, the online music streaming service. The two already had an agreement that allowed UMG’s music catalog to be streamed on the platform. But UMG recently announced a new deal with the music streaming service that will expand the features available to its artists and allow them to engage more with fans and better promote their music directly on the platform.
Spotify itself announced some time ago that some new features would be included on the platform and that these new social and promotional tools would be made available to artists over time. It now looks like UMG artists will be the first to benefit (which, after the TikTok fallout, is good news for them).
Little has been revealed about these new features as yet, but we do know that one of the additions will be the ability for music artists to tease new songs on the Spotify platform by uploading a short clip and allowing people to pre-save songs directly from the short clip.
So it seems that Spotify is moving away from its identity as an exclusively online streaming service and will soon include features that will make it more like a social media platform.
Conclusion
It’s easy to see how all of these decisions are connected but it’s too soon to tell what the results will be for Universal Music itself. However, it’s safe to say that the changes that it is making to the way it operates will most likely have a big impact on the music industry as a whole as these various precedents could lead to a change in the way other major labels approach digital distribution in the future.
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