Universal lost. We know this because no terms were announced. A deal was struck, and Lucian Grainge walked away with his tail between his legs while declaring victory.
I'm not saying Universal got nothing, but compared to what it wanted...
This was a gross miscalculation. Grainge thought TikTok was MTV, whose lifeblood was music, or Spotify, which wouldn't even launch in America without the content of all the major label groups.
In other words, TikTok is bigger than Universal. It taught the music industry a lesson, one it did not want to learn, that will negatively affect the business for years to come.
The music industry is under the illusion that the world can't run without it. And/or Universal is under the illusion that the world can't run without its catalog. However this is untrue. People need food and shelter, they don't need music. And if they do want music, they can sing, they can play, they don't have to get it from big companies concerned with their stock price and a CEO auguring for even greater compensation.
Furthermore, Taylor Swift put a stake in Universal's heart, undercut the entire effort, by saying that she couldn't launch a new album without TikTok, that it was integral to her marketing efforts. Once again, Swift is not a team player, she only cares about herself and her minions, the all-adoring Swifties.
Then again, an uninformed blind eye is the name of the game these days. You can be anti-Israel, you can be pro-Palestinian, but over and over again protesters are interviewed about the underlying situation and proven to be ignorant, even at Harvard:
"Harvard’s Protesters Aren’t as Obstinate as You Might Expect"
Free link:
t.ly/HkBkD So what happens in the future?
Well, if your company is not solely music dependent... It's now been proven that you have more leverage than you thought, that you can stand up to Big Music. Yes, the music industry is hated just like Big Pharma. Do you think TikTok users were enamored of Universal's artists and music by this pullback? And the ball keeps moving. Let's look at the cable industry. Cable systems stood up to content providers' desire for more money, sometimes taking the channels off the platform. The content providers thought they held all the power. But now ESPN, the overcharging behemoth that goes unwatched by many who pay for it, has floundered and cable companies are reorienting themselves as internet providers. As for the rest of the channels up the dial... Does anybody even watch the aforementioned MTV? The value of its owner, Paramount+, has crashed, because there was no strategy for when cable declined. As for the consumer, angry about the escalating price of cable, they cut the cord. Used to be viewers had no option, but now they do.
Universal is losing leverage. It's got a decreasing percentage of overall mindshare. It is no longer a controlled market, today anybody can play. Physical is a de mimimis element of the business, despite all the hoopla about vinyl, CDs are moribund and the active audience that breaks acts does not listen to controlled terrestrial radio, but the open playing field of TikTok. Anybody can get their wares on streaming services, and the production of music has never been cheaper. In addition, although it took twenty years to prove it, the bottom line is there are a lot of overlooked quality creators out there. And they're doing it on their own. While Universal consolidates, lays off people and puts out fewer and fewer records. In an expanding market you grow, but Universal is doing just the opposite?
The game has changed and Universal is playing the same one it did in the last century. Spending a fortune to break a limited number of acts. But now Spotify tells us the hitmakers have a decreasing share of the market. And the three major label groups can't even break a new act. It's not like the public isn't embracing new music, but it's the niche acts that major labels used to sign and develop that they started to overlook in the MTV moonshot era and now have no interest in. The majors are lighting rockets trying to light up the sky with new acts and the public is ignoring most of them while it forages on earth for ground-level acts.
It's almost like the newspapers. Turned out they were not the only place you could get the news, never mind Craigslist undermining their classifieds business. Sure, Universal has its catalog, and that will always have value, but when it comes to new music production their model is out of date.
This is Napster come to haunt the industry. Once again, Big Music did not see what was coming down the pike, and then thought it could quash it. Daniel Ek saved the labels, but Spotify needed the labels.
If you keep doing the same thing over and over again, don't expect it to win. Everything new and innovative comes from the outside, from independents. The majors believe they can hoover up anything successful. But now, you can go it alone. Not all do, but you can create a business without major label help, which is not even offered unless you make music that fits into a narrow paradigm, hip-hop and pop.
Also, you wonder whether the label is really on your side. So Universal's artists were hurt when Grainge pulled their music from TikTok and that loss can never be completely recouped. Acts lost momentum. The compensation was secondary to the promotion. This is Internet 101, exposure trumps getting paid every day of the week. If you're not in the marketplace, you're done, because there are so many other options. I'm not saying that Universal and its artists should not get paid more by TikTok, I'm not saying I completely agree with TikTok that promotion on the service is equal to compensation, but I am saying Lucian Grainge misread the situation, saw it through an antique lens and didn't realize the game was different this time.
So the end result is consumers, to the degree they remember, and who knows how many will, will have a bad taste in their mouth about Big Music, at a time when its image had recovered from all the fighting of technology of the past. Artists will be skeptical of their labels' efforts. And most people just won't care.
The name of the game is attention. Money comes after. You don't undercut attention, never. Just ask Taylor Swift.
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