TikTok and Merlin’s rift could have damaging consequences for indie music

Social media platform TikTok and Merlin, a digital licensing partner for independent labels, distributors and rights holders, have reached an impasse in their contract negotiations.
A possible extension agreement is becoming urgent as TikTok’s current contract with Merlin expires on 31 October. Earlier this month, Merlin announced that TikTok representatives walked out of contract renegotiations.
TikTok accuses Merlin of inadequate quality control and streaming fraud. The allegation is not entirely unfounded, as over the past two years TikTok has reported hundreds of songs to Merlin that have been flagged as infringing on its platform. In 2022, these songs garnered more than a billion plays on TikTok over a six-month period.
Merlin says it recognises the problems and has taken steps to eradicate illegal content. These measures include automated systems to detect suspicious activity, a dedicated team to impose sanctions on fraudulent operators, and the termination of membership for operators who repeatedly manipulate the system.
For TikTok, this is not enough. It wants to continue to enter into individual contracts with the labels represented by Merlin, effectively forcing Merlin’s member labels and distributors to accept direct contracts or lose their ability to make money on the platform.
The decision can be seen as an attempt to fragment Merlin’s membership, which accounts for 15% of the global music recording market. Merlin suspects that TikTok’s real motive is to weaken the bargaining power of independent record companies and use this leverage to reduce their remuneration.
Merlin negotiates digital licences for more than 30 000 small and medium-sized record companies worldwide and has partnerships with more than 40 digital services. Indie labels choose Merlin to license their rights because the collective has the expertise and experience to negotiate deals. This avoids cases of exploitation and ensures that compensation is competitive with the big companies.
When TikTok refuses to negotiate with Merlin for music that generates billions of dollars for TikTok, it restricts the freedom of indie labels to decide their own business models. At the same time, it undermines the ability of music creators to earn money from their art.
Earlier this year, Universal Music Group temporarily removed its music from TikTok after the parties could not agree on a fair level of compensation. UMG artists disappeared from the platform until Taylor Swift made a landmark deal to return her songs to TikTok. The rest of UMG’s catalogue followed suit on 1 May.