Universal Music cancels licensing agreement with social video-sharing app Lomotif

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After wasting much of the internet age losing an endless game of Whack-A-Mole to copyright infringers, Universal Music is tearing down the walls around its music vault — and gets paid to do it.

This week, Universal struck a licensing deal with Singapore-based TikTok rival Lomotif, giving users of the DIY music video app access to thousands of songs from the US label’s most popular artists, including Drake, Billie Eilish and Taylor Swift.

New solution to an old problem

Now that a viral dance video can propel a song to the top of the Billboard charts, the music industry dinosaurs are beginning to appreciate the power of social media. Instead of targeting a small Youtuber for unauthorized use of an Ariana Grande track, Universal Music is now entering into licensing agreements with social sharing apps such as TikTok, Snapchat and Triller for use of its catalog.

With an IPO slated for September, Universal is looking for revenue streams from all angles, so another licensing deal — this time with video-sharing app Lomotif — was a no-brainer. And while it might be a stretch to call any app a rival to the ultra-popular TikTok, Lomotif’s rise to prominence has been sensational:

  • According to the Financial Times, Lomotif saw 225 million app downloads, with 31 million monthly active users in 200 different countries, and 300 million videos viewed on the app each month.
  • In February, a group of investors, including former MoviePass chairman Ted Farnsworth, acquired an 80% majority stake in Lomotif for approximately $125 million.

By signing more and more licensing deals, Universal is gaining access to an expanded army of potential marketers and amateur advertisers for its top artists, while profiting from its catalog at the same time.

Royalties, finally: With streaming and subscriptions accounting for half of the label’s $8.8 billion in operating revenue last year, Universal Music is considering new sources of royalties, with social media part of a larger strategy that also targets the world of gaming and fitness apps like Peloton.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Shirley K. Rosa