TikTok Is Busy Signing Indie Label Deals Without Merlin — Reports Suggest Monetization Shift, Too

TikTok’s existing licensing deal with indie collective Merlin ended on October 31st. Now, the social media juggernaut has been busy inking deals outside of that expired deal, apparently with monetization changes in place. Here’s what’s leaking.

As a quick rewind on this imbroglio: TikTok first informed licensing collective Merlin that it would not be renewing its long-standing deal, set to expire on October 31st, back in September. At the time, Merlin went public with a statement claiming TikTok walked away from the licensing negotiation before it had even began. TikTok said it would go its own way in forging licensing deals with the labels and distributors that Merlin represents.

Merlin accused TikTok of attempting to fragment its membership and minimize payments for indie artists. TikTok released a statement calling into question Merlin’s delivered content and the inability to separate fraudulent content from Merlin. Merlin addressed those concerns by mentioning several steps it took to verify the content it delivers—but TikTok said too little, too late.

The first domino to fall came last week, when UnitedMasters announced it had secured its own licensing deal with TikTok. Now, a Billboard report interviewing twelve executives at various indie labels and distributors reveals that many are divided on what to do. Some want to make sure there is absolutely no way to move forward without Merlin, while others are forging ahead, feeling an obligation to their clients to promote them as best as possible.

“If I still thought that not signing would help Merlin get a new deal, or could help the independent music community, I would try not to sign,” one exec speaking anonymously told Billboard. “But even when Universal didn’t sign, [TikTok] didn’t care. We have no choice because our artists want to be on TikTok—perhaps too much—but for them, this is very important.”

According to those sources, the compensation terms provided under the new individual offers are not any better or worse than Merlin’s collective bargaining. But that doesn’t mean no changes at all. The big one? TikTok is not paying out music licensors based on views a song receives, rather than new creations. TikTok calculates market share based on views and the payment to the licensor is divided up from there—but that doesn’t mean there’s now a certain royalty amount per view.

“It won’t lead to a major difference in how much we are paid,” one exec told Billboard. “We are still doing the math, but it seems like there will be about a 4% difference in what we take in from TikTok, give or take.” Most executives view TikTok’s value not in compensation, calling it one of the ‘smallest revenue earners’ for a music company. Instead, they see value in the platform as a promotional avenue.

Some changes to the previous contracts also included a ‘most favored nations’ clause, giving licensors the right to the same terms and benefits as similar licensors who do business with TikTok. These new contracts do not. A new provision across these separate contracts also include a ‘know your customer’ clause, which requires verification of artists’ identities before allowing them to upload songs. That clause came out presumably to weed out bad actors who are using AI and bots to finagle music streaming services out of millions. But it also places the onus of bad actors on labels and distributors—rather than TikTok directly.