Universal Music Group Update
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Vivendi’s Universal Music has reached a licensing agreement with Lomotif, an emerging Singapore video sharing application, because major music companies see social media as an emerging source of revenue.
The agreement allows Lomotif users to access thousands of songs by Universal Music artists including Taylor Swift, Drake and Olivia Rodrigo to use in their video clips. Lomotif is a smaller competitor of TikTok. It encourages users to “turn your favorite moments into music videos” and provides editing tools to create short videos dubbing songs.
Financial terms have not been disclosed. These licensing deals usually last for about two years, and the company agrees to pay a fixed share of the total revenue to the record company in exchange for their song catalog.
In the past six months, as social media has become a money-making tool, Universal Music has reached licensing agreements with Snap, TikTok, and Triller. “Social is a booming business,” Michael Nash, head of digital strategy at Universal Music, told the Financial Times.
Although subscription streaming on apps such as Spotify is still the main source of revenue for the music industry, record companies are always looking for new areas to earn royalties, such as social media, games, and fitness apps (such as Peloton).
Previously, major music companies had fought YouTube over copyright infringement for several years, sending removal notices for songs used in user-generated videos. But as more and more social media companies agree to pay for the music used on their platforms, and music companies find that these sites are a valuable form of publicity for artists, the strategy has changed.
“There was a time when this approach was: We had problems with the content on your platform,” Nash said. “The posture has changed… We see the importance of contacting the company as early as possible in the process.”
Universal Music began negotiations with Lomotif as early as 2016.
The deal comes as Universal Music, the largest record company that controls about one-third of the world’s music, is preparing to conduct an IPO in September.Hedge fund billionaire Bill Ackerman agreed this month Purchase 10% of the shares Due to the improvement of the music business, the owner Vivendi tried to extract cash from its lucrative division to acquire Universal Music for US$4 billion.
Universal Music’s operating income last year was 8.8 billion U.S. dollars, and its operating income was 1.8 billion U.S. dollars. Streaming media and subscriptions brought in $4.5 billion in revenue, an increase of 16% over the previous year.
Founded by entrepreneur Paul Yang in 2014, Lomotif has been gaining popularity in the past few years. So far, the app has been downloaded more than 225 million times, and the app is watched 300 million times a month. Earlier this year, a consortium of investors including former MoviePass chairman Ted Farnsworth acquired an 80% stake in Lomotif for $125 million.