Recently, social media giant TikTok stirred controversy by choosing not to renew its collective licensing agreement with Merlin, a digital rights agency representing independent labels that collectively account for around 15% of global music consumption.
TikTok’s Strategy
The decision not to renew this agreement appears to be part of TikTok’s strategy to pressure individual labels represented by Merlin to sign direct deals under TikTok’s own terms—a move that many industry professionals describe as a “boycott” against Merlin.
TikTok has cited concerns about streaming fraud, particularly with content that some Merlin members have uploaded to the platform, as its reason for this shift. The company argues that direct agreements with individual labels will enable it to better control the quality and authenticity of the music on its platform, thereby addressing these issues more efficiently.
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Independent Labels Under Pressure
This situation has raised alarms among independent labels and distributors, who now feel pressured to sign new agreements with TikTok as soon as possible to keep their music on the platform. Companies like Ditto Music and UnitedMasters have already signed direct deals with the social media giant.
Meanwhile, sector organizations such as IMPALA (Independent Music Companies Association) have criticized TikTok’s strategy, arguing that it could destabilize smaller labels who rely on collective agreements to negotiate fairly and effectively.
Seeking to protect those most affected, IMPALA has urged the European Commission to intervene, asking TikTok to extend the current agreement to relieve pressure on labels and to resume good-faith negotiations with Merlin. IMPALA also proposes allowing labels who have already signed direct deals the option to return to Merlin’s collective agreement if they so choose.
Although the original Merlin agreement expired on October 31, many companies have yet to respond to TikTok, hoping for a resolution that reinstates collective licensing with Merlin.
In light of these developments, UFi (Unión Fonográfica Independiente) has shared the following recommendations for those unsure of how to proceed:
Make decisions in your own best interest: Do not feel pressured to rush into a direct agreement with TikTok if you disagree with its terms. It’s crucial that any decision made benefits your label or rights.
Carefully evaluate offers: When considering TikTok’s various proposals, take into account feedback from other UFi members:
- Although the financial terms may appear attractive, a detailed analysis suggests they do not surpass those of the Merlin agreement.
- Check whether financial incentives like advertising credits are included, as it seems that some deals include them while others do not.
- Some broad-reaching provisions in these offers are reportedly less favorable than those in the Merlin deal.
Strength in Unity
TikTok, a platform that has rapidly transformed the music industry, now faces scrutiny in the sector.
Its decision has raised concerns about fairness in licensing negotiations, musical diversity on the platform, and the potential impact on independent music worldwide.
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