Universal Music Group (UMG), the record company that signs artists such as Taylor Swift, Billie Eilish and Ariana Grande, said it will remove its music from TikTok starting at midnight tomorrow due to failure to reach an agreement on royalties with ByteDance, the parent company of the TikTok platform. UMG will no longer seek to renew its agreement with TikTok that expires on January 31, and plans to stop licensing content to TikTok and its music service TikTokMusic.

In a press release, UMG accused TikTok, which was said to have nearly $20 billion in ad revenue last year, of trying to build a "music-based business without paying fair value for (artists') music."

"TikTok proposes to pay our artists and songwriters a fraction of what major social platforms of its type do," the company wrote. "Today, despite TikTok's large and growing user base, rapidly growing advertising revenue, and increasing reliance on music content, TikTok's revenue represents only about 1% of our total revenue, which illustrates how little TikTok compensates artists and songwriters."

TikTok did not immediately respond to a request for comment.

According to UMG's press release, TikTok and UMG disagreed over payment for use of UMG property for AI-generated recordings. In addition, UMG also stated that TikTok did not take appropriate measures to quickly remove content that infringed the copyright of the record company.

"The bottom line is that TikTok is trying to build a business based on music without paying fair value for the music," UMG wrote.

UMG's current contract with TikTok extends back to 2021 and covers music recorded by UMG's artists and Universal Music Publishing Group's songwriters. As part of the agreement, UMG and TikTok agreed to trial new features, such as allowing users to include clips from UMG's entire music catalog, including BadBunny, SZA, Drake, Kendrick Lamar, Harry Styles, Justin Bieber, Adele, U2 and Elton John.

The relationship between TikTok and UMG broke down because TikTok placed more emphasis on music creation and curation.

The platform positions TikTok Music, launched in some countries last year, as a strong rival to Spotify and Apple Music. At the same time, TikTok is piloting the "AI Song" feature, which uses artificial intelligence to create songs based on user input prompts.

While TikTok has shown a willingness to work with certain record labels on terms it deems favorable — the platform is reportedly in talks with Warner Music Group, Sony Music Entertainment and UMG over a share of ad revenue "throughout" 2022 and 2023 — it hasn't been shy about flexing its muscles where it sees fit. In February last year, TikTok removed major record label music services for some users in Australia, in an apparent test of how user engagement would be affected.

Recently, TikTok tried to reach an exclusive distribution agreement with musicians for ByteDance’s SoundOn service, which can be distributed directly to TikTok and music streaming services. In addition, TikTok has also launched a program called "Elevate" to discover the next wave of rising stars in the music industry.