Impala calls out “value gap” with TikTok, urges DSPs to address “unintended consequences” of proposed streaming reforms

04 April 2024 - Press release

Over the past few weeks IMPALA has been consulting members on the question of value with “moment economy” services like TikTok, as well as the impact of recent reforms proposed by Deezer, Spotify and Apple, with the key goal of fixing existing value gaps and ensuring that no new ones are created.

Already flagged three years ago and again in its revised streaming plan in May 2023, IMPALA underlines the need for services like TikTok to collaborate with the independent music community to achieve fair licensing terms. EU rules on AI are also now in the frame, as well as the independents’ vision of the role these platforms play today.

Helen Smith, IMPALA’s Executive Chair commented: “TikTok and other ‘moment economy’ services are key partners. They play an important role in our music ecosystem and the licensing framework is clear, services need permission for the use of music, including soundalikes and AI adaptations. The new AI framework in Europe also helps set human-centred guide rails in this regard." 

Chair of IMPALA's streaming group and CEO of Everlasting Records and Popstock Distribuciones Mark Kitcatt continued: "As set out in our streaming plan, there is an urgent need to secure fair revenues from these vital services. In line with this, IMPALA supports UMG's stance on TikTok in relation to valuing music properly. The independent community has adopted a similar approach at various points over the years with other services, from MTV to Apple to YouTube. We also reject arguments equating the use of music on TikTok to promotion. There is a huge value gap that must be addressed but, beyond that, an exciting opportunity to explore new ways of generating and sharing revenues."

Dan Waite, chair of IMPALA’s digital committee and CEO of Better Noise Music added: “TikTok is at a pivotal moment in terms of renewing their licensing deals where they can show that they value music fairly on their platform. It’s a use of music that needs to be remunerated like any other. The question of promotion isn't relevant. We wish to see independent labels, rightsholders and artists receive fair pay for usage, and to have terms just as favourable as the largest majors renew their licences on. Working together to better remunerate labels and artists across the whole industry is key. We urge TikTok and other services to respect this principle across the board.”

Another priority of IMPALA’s reform proposals is addressing manipulation and revenue dilution, and IMPALA reconfirms its objective to address these issues and support services that innovate in this area. Streaming manipulation is an issue the industry has united around for some time now, with an industry-wide code condemning the practice signed in 2019, and IMPALA releasing a streaming manipulation guidance subsequently as a follow up. Some services have already partnered with independent distributor-led initiative the Music Fights Fraud Alliance, and IMPALA’s members appreciate how Spotify and Deezer’s messaging around their changes helped give these vital issues more attention.

At the same time, IMPALA members from across 32 countries have repeated their call to work together to solve the unintended negative consequences on independent music of recent revenue allocation reforms proposed by Deezer, Spotify and Apple, noting that adjustments can be made to avoid harm. IMPALA reiterates the sector’s will to work with services to avoid damaging opportunities for young, developing and niche artists, as well as for deep catalogue and specialist genres, smaller territories and for less dominant languages.

IMPALA calls for any changes in how revenue is allocated to be properly assessed by services in terms of the impact they create over the whole market, in line with IMPALA's own proposals. We also call on streaming services to consult and discuss this with their independent licensing partners before the decision is made.

Dario Drastata, Chair of IMPALA and Head of Balkans association RUNDA commented: "IMPALA supports collaborative reform that is sustainable and drives diversity. We seek urgent solutions to address manipulation and revenue dilution. We also need to make sure the proposals are fair to all, and we hope Merlin's recent agreement with Deezer will contribute to this objective. It's the only way to create a sustainable ecosystem. We believe for example that there are simple solutions for problems with thresholds that can be plugged in and will continue our constructive discussions with services to explore options. Finding the answers will ensure services are able to further develop opportunities in key markets and genres as well as across multiple languages.”

The business around the use of short clips on social media services continues to grow exponentially, generating huge increases in revenue for services like TikTok. The way in which TikTok handles its responsibilities more generally also raises concerns worldwide. TikTok has been banned outright in India, since 2020. The European Commission opened formal proceedings against TikTok under the Digital Services Act last month in several areas including illegal and harmful content. In the USA there is a motion to force ByteDance to sell TikTok and similar calls are expected in Europe. 

IMPALA’s members are in the business of development of artists and music careers and recognise the role of social media in the music ecosystem. Music is key content for these services and a significant part of their value. As such, the value of music must be respected and it is to everyone’s benefit that we all work together to uphold and enhance that value. IMPALA indicates its support for UMG’s position in this regard and notes that this is an issue that affects the whole industry.

IMPALA's work on streaming and other digital business issues is a top priority for the organisation. Helen Smith concluded: "IMPALA's work is vital for Europe's music economy. Independents account for over 80% of the sectors' new releases and jobs, providing stable and exciting opportunities for artists, fans and music employees across Europe. This was also reconfirmed at IMPALA's AGM last year, including the elimination of value gaps, and developing the digital market in all territories with great talent, huge audiences and untapped digital potential, such as in Central and Eastern Europe. "