But TikTok's benefits to the music industry were primarily in exposure, not money. Despite earning around $18 billion annually in ad revenue (in large part through videos that use licensed music), one study estimated that TikTok only pays out $400 million annually to all music rights holders. Unlike Spotify, which pays fixed royalty rates per stream, TikTok pays a flat fee to labels as a kind of blanket license.

UMG's dispute with TikTok upended that agreement.

In a January open letter announcing the threat of a pullout, UMG said that "TikTok proposed paying our artists and songwriters at a rate that is a fraction of the rate that similarly situated major social platforms pay …Ultimately TikTok is trying to build a music-based business, without paying fair value for the music. TikTok's tactics are obvious: use its platform power to hurt vulnerable artists and try to intimidate us into conceding to a bad deal that undervalues music and shortchanges artists and songwriters as well as their fans."

In a statement to The Times, TikTok said that "It is sad and disappointing that Universal Music Group has put their own greed above the interests of their artists and songwriters. Despite Universal's false narrative and rhetoric, the fact is they have chosen to walk away from the powerful support of a platform with well over a billion users that serves as a free promotional and discovery vehicle for their talent. TikTok has been able to reach 'artist-first' agreements with every other label and publisher."

In February, UMG followed through and pulled its enormous catalog — which included songs by Universal Music Publishing Group songwriters in addition to UMG recording artists — from TikTok. The ferocity of UMG's actions surprised even major-label veterans.

"It was such a ballsy move," said Sarah Flanagan, a former senior director of digital marketing at Columbia Records (which is not part of UMG). "TikTok hasn't figured out a way to compensate artists or labels fairly for the amount of music that gets used. As great it's been for music discovery, I hope this works, because TikTok's system for compensating artists is either not good enough or they don't care enough."

Eugene Lee, the founder of ChannelMeter, a firm that handles payments to musicians and content creators across social platforms, said that TikTok could change the way it compensates musicians, but has little incentive to now.

"YouTube distributes an enormous chunk of its revenue to music rights. TikTok hasn't prioritized that, so you have to ask, what are they prioritizing?" Lee said. (In 2022, YouTube paid about $6 billion to music rights holders). "Maybe they don't want to be so dependent on music as an economic factor of their platform. Rights are a complex problem, but every year they say, 'Oh, we'll come to a fairer model next year,' and labels just got fed up."

Yet UMG's sudden about-face, after years of accepting these terms, surprised other tech industry-watchers.

"ByteDance built this multibillion dollar company off of content including music. If UMG had said years ago that 'you can't do this,' I'd say sure, you're pissed because a company is growing off your music," said Ed Zitron, a tech marketing executive and host of the insightfully skeptical podcast "Better Offline." "But this just feels like rich people smacking each other in the face. Music needs TikTok more than TikTok needs UMG. TikTok has the leverage, and the only people suffering are musicians and customers."

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