Universal Music signs licensing deal with video-sharing app Lomotif
Vivendi’s Universal Music has entered into a licensing agreement with Lomotif, a booming Singapore-based video-sharing app, as major music companies look to social media as a nascent revenue stream.
The deal gives Lomotif users access to thousands of songs from Universal Music artists, including Taylor Swift, Drake and Olivia Rodrigo, to use in their music videos. Lomotif, a smaller rival to TikTok, encourages users to “turn your favorite moments into a music video”, with editing tools to create short clips to the songs’ soundtrack.
Financial terms were not disclosed. These licensing deals typically last around two years, with the companies agreeing to pay the record labels a fixed share of the total revenue in return for access to their catalog of songs.
In the past six months, Universal Music has struck licensing deals with Snap, TikTok and Triller as social media heats up as a moneymaker. “Social is a booming business,” Michael Nash, head of digital strategy for Universal Music, told the Financial Times.
While subscription streaming on apps such as Spotify remains the main source of revenue for the music industry, record labels have sought new areas to reap royalty revenue, such as social media, gaming and fitness apps like Peloton.
Major music companies have already spent years battling YouTube for copyright infringement, sending out takedown notices for their songs used in user-generated videos. But there has been a shift in strategy as more social media companies agree to pay for music used on their platforms, and music companies find these sites to be a valuable form of promotion for artists.
“There was a time when the approach would be: we have a problem with the content on your platform,” Nash said. “There was a change in posture. . . we see the importance of engaging with companies as early as possible in the process.
Universal Music had entered into discussions with Lomotif as early as 2016.
The deal comes as Universal Music, the biggest record label that controls around a third of the world’s music, prepares for an IPO in September. Hedge fund billionaire Bill Ackman agreed this month to buy a 10% stake in Universal Music for $4 billion, as owner Vivendi tries to squeeze cash out of his lucrative unit through a turnaround in the music industry.
Last year, Universal Music earned $1.8 billion in operating profit on $8.8 billion in revenue. Streaming and subscriptions brought in $4.5 billion in revenue, up 16% from a year earlier.
Lomotif, founded in 2014 by entrepreneur Paul Yang, has grown in popularity over the past few years, with over 225 million app downloads to date and 300 million videos viewed on the app per month. Earlier this year, a consortium of investors including former MoviePass chairman Ted Farnsworth paid $125 million for an 80% stake in Lomotif.