As it has blossomed into one of the largest social media apps ever, TikTok’s valuation stands at around $50-75 billion USD. Whether it’s on the far left or right of the scale, the amount is still gargantuan nonetheless. However, brand labels for music are also eyeing to get a chunk of the TikTok train. After all, much of the platform’s success can be attributed to the audio aspect of things. Now though, things are getting a little bit hectic.

It appears that the biggest record labels are no longer happy with the flat fees part of the current agreement. As of now, the record deals usually run for a length of two-three years with some contract extensions here and there. This setup was fair when the platform was nothing but a fledgling application. However, now that it’s grown, platforms such as Sony Music Entertainment, Warner Music Group, and Universal Music Group all desire to change the terms to something that benefits everyone a bit more.

As a result, these big three companies along with some others have asked TikTok to pay a bit more for the music built-in the app. We surmise it can only go two ways. The first is a higher flat fee for the application – which is a simple and easy solution. Both parties will just have to negotiate to come to a more favorable number, which according to industry professionals, is around two to ten times the current amount.

The other alternative is a completely-overhauled system that involves tying in music usage rates to the fees paid, which can impact all parties positively and negatively.

Aside from this, brands have also asked for a cut in TikTok’s advertising revenue as well. This is a little bit more far-fetched but it is likely that music label groups on TikTok will find some way to justify this to the ByteDance executives. Considering that the TikTok parent company ByteDance is now investing in other fields such as in-house chipsets, it’s quite clear there’s a lot of money going around.

The numbers don’t lie: it is reported that TikTok earned around $4 billion in 2021 and is slated to earn triple that at $12 billion this year. With that in mind, this renegotiation between TikTok and music labels was to be expected. Let’s just see how it goes.