Universal Music strikes licensing deal with video-sharing app Lomotif

Universal Music Group updates

Vivendi’s Universal Music has struck a licensing deal with Lomotif, a rising Singapore-based video-sharing app, as the major music companies look to social media as a budding revenue source.

The agreement gives Lomotif users access to thousands of songs by Universal Music artists, including Taylor Swift, Drake and Olivia Rodrigo, to use in their video clips. Lomotif, a smaller rival to TikTok, encourages users to “turn your favourite moments into a music video”, with editing tools to create short clips soundtracked to songs.

Financial terms were not disclosed. These licensing deals typically last for about two years, with companies agreeing to pay the record labels a fixed share of total revenue in exchange for access to their song catalogue.

In the past six months Universal Music has reached licensing deals with Snap, TikTok and Triller, as social media heats up as a moneymaker. “Social is a booming business,” Michael Nash, Universal Music’s head of digital strategy, told the Financial Times.

While subscription streaming on apps such as Spotify remains the dominant income source for the music industry, the record labels have been seeking new areas to reap royalty income, such as social media, gaming, and fitness apps such as Peloton.

The big music companies previously spent years fighting with YouTube over copyright infringement, sending takedown notices for their songs being used in user-generated videos. But there has been a change in strategy as more social media companies agree to pay for music used on their platforms, and music companies find these sites 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,” said Nash. “There has been a change in posture . . . we see the importance of engaging with companies as early as possible in the process.”

Universal Music had begun talks with Lomotif as early as 2016.

The deal comes as Universal Music, the largest record label that controls about a third of the world’s music, prepares for an initial public offering in September. Hedge fund billionaire Bill Ackman this month agreed to buy a 10 per cent stake in Universal Music for $4bn, as owner Vivendi tries to squeeze cash out of its lucrative unit thanks to a turnround in the music business.

Universal Music last year earned $1.8bn of operating income on $8.8bn in revenue. Streaming and subscriptions brought in $4.5bn in revenue, up 16 per cent from the previous year.

Lomotif, founded in 2014 by entrepreneur Paul Yang, has climbed in popularity over the past few years, with more than 225m app downloads to date and 300m videos watched on the app per month. Earlier this year an investor consortium, including former MoviePass chair Ted Farnsworth, paid a reported $125m for an 80 per cent stake in Lomotif.

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