TikTok vs. Merlin: Licensing Impasse Looms — TikTok Pushes Back Against the Indie Collective

Photo Credit: Microsoft Copilot

A letter from Merlin to its members has revealed TikTok is ‘walking away’ from licensing negotiations with the collective. Instead, the social media giant wants to seek direct deals from larger Merlin members—completely bypassing the collective.The Merlin music collective negotiates digital licenses for more than 30,000 independent labels around the world. In a letter addressed to those members dated September 27, Merlin says “with no warning, TikTok walked away before negotiations even began. They informed us that (1) they do not want to renew our deal, which expires on October 31st, and (2) they intend to license some of our members directly.”

“To be even more clear, unfortunately, as of now, there will not be a Merlin-TikTok deal after October 31st,” the letter reads. TikTok pays less than other digital service providers (DSPs) to license music, so this move further undermines independent labels’ ability to negotiate better streaming rates for their music. Merlin alludes to such in their letter to members.

“We believe the most likely reason that TikTok did this is that TikTok does not want to pay a fair rate for the music that powers the platform. If this is right, then TikTok does not value independent music, the independent labels and distributors who support that music, nor the diverse artists who create it. They are unlike every other partner that Merlin works with.”

“Given that TikTok refused to negotiate with us, our view is that they must see the obligation to pay fair royalties as a nuisance. They must view Merlin — with its mission to protect and maximize the value of our members’ music — as too strong a negotiating partner for their liking. Their approach suggests that they believe their objectives can be better served by fragmenting the Merlin membership, in order, we believe, to minimize their payout.”“TikTok has asked us for an ‘orderly transition’ to do direct deals with those members they deem worthy. As you know, Merlin was founded to stand up for and champion its members. We will not support an approach that devalues our community,” the letter continues.

Merlin outlines a plan to try and re-engage with TikTok as a collective to secure a renewal agreement before the current one expires on October 31. But it also reveals that one of TikTok’s concerns in walking away was potential fraud. “TikTok has also suggested they are walking away because of concerns about ‘fraud,’ but as we have told them on numerous occasions, we are incredibly pro-active on this issue.”

“We recognized early on, and communicated with TikTok, the concerning growth and impact of stream manipulation and fraudulent content both on TikTok and across the marketplace. We have worked productively and collaboratively with TikTok on this issue, and until now, no concerns have been raised about the approach Merlin is taking.”

“We have implemented measures to address illegitimate activity and content; automated systems to detect suspicious activity; and a dedicated team to address issues and impose sanctions, including ultimately, termination of membership for bad actors.”

Merlin represents around 15% of the global recorded music market, making this a big departure from TikTok’s music catalog if the deal falls through. Merlin licenses music from artists including The Lumineers, Wet Leg, Nirvana, Phoebe Bridgers, Mac Demarco, Coolio, Diplo, and many more. Without a collective agreement, each individual label would be responsible for negotiations with the platform.Earlier this year, Universal Music Group saw its music temporarily removed from TikTok as the two sides struggled to come to an arrangement. UMG music disappeared from the platform until Taylor Swift struck a landmark deal in April to bring her music back—with the rest of UMG and UMPG music returning to TikTok on May 1.