Representatives of the independent record label community across Europe have criticised TikTok for walking away from licensing negotiations with Merlin, the global digital licensing agency that negotiates deals on behalf of thousands of indie labels and distributors around the world.
When Merlin’s current TikTok deal expires, labels and distributors will need to sign direct deals with the social media company. The indie community rejects claims from TikTok that it is seeking to circumvent Merlin, and deal directly with its member labels, as part of efforts to crack down on streaming fraud and the delivery of copyright infringing music.
The indie labels and their representatives mainly see this as a divide and conquer strategy from TikTok, which they believe is hoping to force individual labels into less favourable deals. And that’s the kind of strategy that Merlin was established to combat.
As well as indie label trade groups IMPALA, AIM and UPFI, the independent publishers have also called on TikTok to rethink its new strategy via their global trade group IMPF.
Dan Waite, CEO at Better Noise Music and Chair of IMPALA’s Digital Committee: “Labels should be free to decide, this is a question of principle and TikTok’s boycott should be called out. Record labels have entrusted their rights to Merlin to negotiate on their behalf and by TikTok going directly to rightsholders they are disrespecting the licensing agreements that are in place. Like a supermarket chain negotiating directly with individual farmers for the price of their milk, it’s difficult to see how this can work out in the farmers’ favour”.
Mark Kitcatt, CEO of Everlasting Records and Chair of IMPALA’s Streaming Group: “Given the timing, it seems clear that TikTok’s real intention is to fragment the sector and drive down the value of independent music, rather than deal with streaming manipulation. There is clearly a huge value gap already in terms of revenues paid for music. TikTok’s move underlines the power it has in the market. It will harm cooperation to end streaming fraud, increase friction and inefficiency and diminish choice for TikTok’s customers”.
Helen Smith, Executive Chair of IMPALA: “We invite TikTok to see the value of a renewed collective deal through Merlin and collaborate on growing this important part of the ecosystem. We hope that efficiency and choice for TikTok users, as well as access for artists and labels whatever their country or genre or level of success, and of course joint and standardised efforts on fraud, will prevail and look forward to growing this vital part of the ecosystem”.
Gee Davy, Interim CEO of the UK’s Association Of Independent Music: “The independent music community have engaged enthusiastically and respectfully with TikTok and TikTok should in turn respect labels’ choice to license through Merlin. Merlin’s collective approach ensures independent music achieves the high value it deserves”.
“This is vital for maintaining an open market with strong consumer choice and supports diverse emerging artists in breaking through. Online fraud is an issue across the whole industry but our members tell us that Merlin is a leader in tackling this. Fraud is best combatted by the industry engaging and working collaboratively, as Merlin have been doing effectively with platform partners”.
French indie label trade body UPFI: “In a letter to its members, Merlin, the agency responsible for negotiating digital licences for thousands of independent labels worldwide, has indicated that the forthcoming negotiation of a new collective agreement with TikTok has been nipped in the bud by the latter. As the current agreement expires at the end of October, the Chinese firm has called on distributors and major independent producers to sign directly with it, without going through Merlin.
By calling for a boycott of one of the main representatives of independents on spurious grounds, it is to be feared that TikTok is attempting to impose even worse remuneration conditions on the music market. In fact, the platform already pays very little for the musical productions it exploits, even though they make up a large part of its value.
Claiming 1.7 billion users by 2022, TikTok has gradually established itself as the world's most popular social network, particularly among young people. It is a fact that the platform now plays a crucial role in promoting artists from all over the world to the public. TikTok’s obvious position of domination sends a very bad signal to independent creation, by potentially depriving it of access to its users.
Beyond the legal questions raised by this power grab, we regret that the platform is showing such a lack of respect for artists and all the professionals who enable it to capitalise on musical creation. Another discouraging signal: the French recorded music sector is still waiting for TikTok to pay the ‘streaming tax’ created by the 2024 finance law, in the same way as its competitors.
We call on local and European authorities to take up this issue and guarantee a level playing field for TikTok’s rightsholders and partners. Now more than ever, we need to question the resurgence of concentration phenomena that are damaging our cultural industries”.
Independent publishers trade body IMPF: “TikTok must engage with and establish a licensing agreement with Merlin if it wishes to use the music of Merlin’s members on its platform. To try and circumnavigate Merlin’s collective licensing is a thinly veiled attempt to divide independent labels and drive down the price of music. Merlin’s members have entrusted their rights to the organisation in order to uphold transparency, efficiency and fair remuneration. That must be respected”.