On September 27, indie labels and distributors around the world received a letter from Merlin, the coalition that negotiates their licenses with TikTok and other digital services. “Without warning, TikTok pulled out before negotiations even began … they do not want to renew our agreement, which expires on October 31,” Merlin's letter said.
Instead, Merlin explained, TikTok wanted to make deals with most of the labels and distributors directly represented by the coalition, a move Merlin saw as an attempt to “fragment” its members and “minimize” payments for indie music. (TikTok says it pulled out of negotiations with Merlin due to concerns about fraudulent content from some Merlin members seeping into the social media app. The company also says it wanted to build closer relationships with Merlin members.)
TikTok and Merlin declined to comment for this story.
Since then, 12 different labels and distributors have spoken among the thousands represented by Merlin Bulletin board about what they would do when their licenses run out after Halloween. Will the indies leave, trying to take a stand against TikTok in solidarity with Merlin? Will they renew their licenses individually? And if they do, how will these deals compare to the ones Merlin negotiated in the past? (Almost all executives I spoke to Bulletin board for this story requested anonymity since most of their respective companies have non-disclosure agreements with TikTok.)
Initially, a distribution executive said their company was not yet negotiating its own license with TikTok — because that executive said they were still hopeful that Merlin and TikTok might return to the negotiating table. “We want to make sure there's no chance with Merlin first,” the executive said. John CarnellCEO of Phoenix Music International (PMI), had a similar view. In an email to Merlin, received from Bulletin boardCarnell said that while TikTok has approached Phoenix individually, “There's no way we're undermining Merlin's position.”
Unlike Universal Music Group (UMG), which pulled its entire label and publishing catalog from TikTok earlier this year when its license to use the platform expired amid renewal negotiations, antitrust laws prevent Merlin to force its members to leave TikTok. It cannot even ask its members to strike collectively against TikTok, leaving the coalition with little choice but to accept TikTok's decision.
Carnell ultimately decided PMI “will not enter into a deal with TikTok,” according to his email, but the other executive took a different tack. This week, in a second interview, the executive said their company has finally decided to sign a direct deal with TikTok. “If I still believed that not signing would help Merlin get a new deal or could help the independent music community, I would try not to sign,” the distribution executive said. “But even when Universal didn't sign [a licensing deal], [TikTok] we didn't care… We have no choice [but to sign a new licensing agreement] because our artists want to be on TikTok — maybe too much — but for them it's very important.”
That's a widespread sentiment among Merlin members, many of whom say their artists want to be on TikTok and must oblige — or risk losing their talent to competitors. In the last week, both UnitedMasters and Ditto announced that they have signed new deals with TikTok. Steve Stoutesaid the founder and CEO of UnitedMasters Bulletin board“I think we've reached a fair deal with TikTok for UnitedMasters and our artists, who understand how valuable promotion can be to their reach… Merlin has done a great job representing independent companies around the world and I'm proud member of Merlin.” TikTok says that now the vast majority of Merlin members have signed direct deals with the company.
Many members say TikTok offered them new deals during that time Bulletin board broke the news in late September that Merlin's negotiations with TikTok had collapsed. But not all members received an offer – which is being monitored, given TikTok's claim that the fraudulent activity allegedly came from specific Merlin members. TikTok's music licenses typically last for two years, and most of the new deals being offered this October will expire at the end of 2026.
Three sources say the compensation terms provided under the new, individual deals from TikTok are not significantly better or worse than those previously negotiated by Merlin, but that there have been some key changes. First, TikTok now pays music licensors based on the views a song's videos get, rather than “makes” (how many videos are made with a particular song playing in the background).
Specifically, TikTok will calculate the market share based on views and then the payment will be distributed from there. This does not mean that TikTok is now paying a specific royalty per view. “It makes sense,” says one indie executive. “I don't know why they didn't always pay based on views.” Another executive added, “It won't make a significant difference in how much we get paid. We're still doing the math, but it looks like there's going to be about a 4% difference in what we get from TikTok, give or take.”
“TikTok has always paid us poorly, so none of this is a financial problem in the short term,” says the executive at the indie label that initially wanted to hold out. “It's one of the biggest social media companies in the world and the lowest grossing for a music company.” Another indie label source had a similar sentiment. “It's more of a promotional avenue than anything else,” this person said. “I think there's value in TikTok deals, but it's, like, 1% of each company's books. It's not much of anyone's job. I really think the rights discussion wasn't the deal breaker, but there were other substantive terms that we wanted.”
One of those key term changes had to do with “advertising credits,” which can also be referred to as “marketing credits.” Three sources said the deals TikTok sent them didn't include those credits, which are money TikTok offers that a tag can put toward advertising and marketing on the app. A source says the previous deal Merlin negotiated guaranteed a budget of millions for advertising and marketing on TikTok, with the sum of the credits divided among individual members based on their size. Now, at least some labels, particularly those with less bargaining power, may not get them at all.
The three sources also said that while the previous contract included a “most-favoured-nation” (MFN) clause, which entitles licensors to the same terms and benefits as other licensors entering into similar contracts with TikTok, the new agreements do not they did One also said their individual deal included a new clause requiring “know your customer” (KYC) checks — which would require artists to verify their identities before allowing them to upload songs — something TikTok says is designed to limit bad actors and fraudsters from obtaining them. music on TikTok. It also serves to place greater responsibility on labels and distributors for the content they deliver. The executive claimed, however, that the provision's language is vague and appears difficult to enforce.
Four sources suggested that UMG's previous licensing dispute with TikTok was the catalyst for TikTok to walk away from Merlin. “[UMG] definitely encouraged TikTok,” says a source close to the situation. “They lost this war and created a very bad situation for Merlin. Sony and Warner will also operate next year. If I were them, I'd be terrified right now.”
However, another indie label executive, whose releases go through a Merlin distributor, has a different take – that, perhaps, TikTok isn't so important now after all. “We're staying with Merlin,” says the executive. “I don't know what will happen. If this had happened a year, two years ago, I would have freaked out. But these days, TikTok doesn't move the needle for our artists like it used to.”
While his artists used to “easily get tens of thousands of views on most TikToks without spending any money,” he says the social media platform is too “saturated” now, and he's being watched as his artists' impressions have dwindled. He is not alone. In a recent Bulletin board story about the modern campaign of creators on TikTok, several digital marketing sources expressed that it is more difficult than ever to release a song on the service. But, as one source put it, “It's still the best we've got.”
“But what does it mean to have no agreement on this point?” asked another indie label executive. “When these things drop, it just encourages bootleg use of songs on these platforms. The music will come up, it just won't be rendered properly.” During UMG's boycott of TikTok earlier this year, it was common to find Universal songs on the platform, just as bootlegged remixes, not official audio. Sometimes, to circumvent the effects of the boycott, top UMG stars like Olivia Rodrigo would even use these bootlegs to promote their latest releases.
TikTok initially told Merlin members that the deadline to finalize their individual agreements with the service was October 25, but a company executive said they have heard that TikTok has offered extensions to some members. Three sources believe Merlin's smaller members won't have room to negotiate beyond the initial boilerplate offer, but the bigger players will find more room to move. Those who received extensions or finalized agreements will not have their music removed from the app today, but TikTok says it has already begun removing songs from those members who chose not to agree. The company assures that the vast majority of Merlin members have already consolidated their agreements.
“I wish it had worked differently between Merlin and Tiktok,” says one Merlin member. “But if our partnership has to be direct with ByteDance to serve our customers, then you know, that's the avenue to take. Only time will tell how this will all play out.”
Additional reporting by Elias Leight
from our partners at https://www.billboard.com/pro/merlin-tiktok-license-expires-what-happens-indie-music-now/
