Warner Music Group CEO Robert Kyncl predicted that Universal Music Group and TikTok will eventually come to terms — allowing the return of UMG’s catalog to the short-form video platform — on an earnings call on Thursday. “I’m confident that they will at some point sign an agreement,” Kyncl told analysts.
Reaching a deal with TikTok “wasn’t easy,” he added. “Our deal was very difficult too. But we got there, and for us it was fair.”
Kyncl emphasized the importance of platforms like TikTok for the music industry in his opening remarks. “The short-form nature of music means it’s well aligned with the data discovery and consumption trends which are driven by the algorithms of the larger platforms and users sharing playlist with each other,” he said.
“Music is easy for fans to create with,” he continued. “Users of the world’s largest social media platforms love using music to soundtrack their own content, further increasing the reach, virality, and popularity of our catalog.”
Responding to a question about the UMG spat with TikTok from Michael Morris, an analyst with Guggenheim Securities, Kyncl was sympathetic to both sides. “I have a pretty unique experience in this obviously having been on the other side and having gone through these types of disputes where content has come down,” the former YouTube executive said. “I know exactly what both Lucian [Grainge] and Shou [Zi Chew] are feeling; I have gone through all of those feelings, multiple times. It is not great for either side, obviously, because I think everybody wants to consummate the deal.”
“There are mutual benefits here,” Kyncl added. “It’s just about what is the right fair value exchange.” (He also took an amusing swipe at journalism, telling Morris, “whatever you read in the press [about UMG and TikTok], don’t believe it.”)
The day before the earnings call, Warner made a whiplash-inducing announcement: It had its biggest quarter ever, but it was cutting 600 employees, or around 10% of its workforce. Most of the cuts were centered on “owned and operated media properties [like Uproxx and HipHopDX], corporate and various support functions,” Kyncl told staff in an email.
Speaking with analysts, Kyncl emphasized that Warner was “laying the groundwork to propel our growth for the next decade” and “firing on all cylinders across many territories around the globe.” He’s pleased with both the company’s release pipeline — citing upcoming albums from Cardi B, Gunna, Coldplay, Sia, and more — and Spotify’s decision to adopt a “new royalty model which better aligns economics with the quality content that drives engagement.”
TikTok’s showdown with UMG came up once more on the call during a question from the analyst Rich Greenfield. Last week, UMG wrote an open letter accusing TikTok of “allowing the platform to be flooded with AI-generated recordings — as well as developing tools to enable, promote and encourage AI music creation on the platform itself — and then demanding a contractual right which would allow this content to massively dilute the royalty pool for human artists, in a move that is nothing short of sponsoring artist replacement by AI.”
When Greenfield asked “how [Warner is] dealing with [TikTok] on AI music,” Kyncl noted that this was an important issue across a wide variety of social media platforms. “They are really the place where the content ends up,” Kyncl. “Our work is focused on making sure that the rules of the road on those platforms respect copyright.”