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News / Song Sleuth / 28 Feb 2022

TikTok and music royalties – how does it work

5 minute read

There’s no questioning the impact that TikTok has had on the music industry in the last few years. The constant uprising of new trends on the platform has turned it into an essential tool for promoting and discovering music everywhere, allowing songs to blow up and gain immense popularity in the blink of an eye.

Exposure, however, is known to not necessarily result in revenue and, at the end of the day, artists need to make money from their work. So how does TikTok compensate the artists for their music?

Unlike other major platforms, TikTok revenue does not work on a streaming basis. While Spotify and Apple Music pay artists by the amount of times their song is played, TikTok actually bases their royalties on market shares. To put it simply: big view counts are not a guarantee of large payments when it comes to TikTok.

Every time a user selects a release from TikTok’s music catalog to make a video, they generate what the platform calls a ‘creation’, which is what they use to calculate market shares. The more creations made using a specific sound, the more revenue is collected for the person responsible for making that audio.

Rather than receiving a royalty for every time an individual clip is viewed, artists receive royalties every time a user creates a video using their music.

Tiktok’s huge sound library provides easy access to a comprehensive amount of songs that their creators can choose from and add to their videos. It also lets users use creations that already exist as inspiration to come up with their own, allowing them to trim, mix and match any available sounds to their liking; which consequently amounts to new creations.

It remains unclear how much money each creation currently accounts for. According to an online estimate, royalties used to be at around $0.0067 per video in 2018, but by June 2019 they had already increased to $0.030. That means that, at that time, ten thousand uses of a song would generate about $300.

It is important to note, however, that TikTok only pays artists who either work with music distributors or are a member of a PRO (Performing Rights Organization). Those are the parties who will then be responsible for collecting and distributing the revenue to the respective rights owners. That means that if an artist chooses to upload their music to TikTok on their own, they will not be able to receive any royalties from the platform. Royalties can also be affected by factors such as the length of the videos created with an artist’s sound and, of course, by the terms set out on the distributor’s contract with TikTok.

TikTok’s quickly evolving status and the never ending conversation surrounding royalties in the music business mean that most of this information is subject to change at pretty much any moment. However, it is important to keep in mind that, whatever the case, the platform remains a significant tool in providing exposure and popularity for artists everywhere.

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