IMPALA has hit out at TikTok after the platform opted not to renew its licensing deal with Merlin.
Just eight months after its huge public row with Universal Music Group, the platform has now become embroiled in a dispute with the independent sector.
Merlin says that it represents 15% of global recorded music in terms of market share. But TikTok has questioned the legitimacy of some Merlin members’ content amid questions over the issue of streaming fraud.
“TikTok must be able to control the quality of the content being uploaded to its platform, and to ensure that all content delivered is legitimate,” said a TikTok spokesperson.
Rather than agree new terms with the digital licensing agency for the independent music sector, TikTok plans to form direct label agreements when its Merlin deal expires on October 31.
Describing the decision as a “boycott” of Merlin by TikTok, in a statement European independent labels trade body IMPALA said: “Considering the history, it seems clear that TikTok's aim with this approach is to pay less for music, with many labels concerned they would be excluded. On top, labels’ freedom to decide how they deal with their rights is being attacked, with TikTok seeking a boycott of Merlin. TikTok also loses out as it will not have access to the same diversity, something which it has already underlined as important.”
IMPALA previously sided with Universal Music Group in its licensing dispute (since resolved) with TikTok, drawing attention to what it called a “value gap” in terms of remuneration.
The trade body added that “this latest development compounds these concerns”.
A TikTok spokesperson suggested there had been “operational challenges with Merlin in the past where music that is not quality controlled for copyright is delivered”.
“It presents a big burden, and doing direct deals allows us to exercise better control and also to forge closer relationships with Merlin members,” said the spokesperson.
Labels that wish to continue to make their music available on TikTok after October 31 need to review and sign agreements before October 25. This means that the catalogue will remain on the platform from November 1, 2024.
We are committed to entering into direct deals with Merlin members in order to keep their music on TikTok
TikTok spokesperson
"TikTok would like to offer all of the world's music to our users,” said the TikTok spokesperson. “We are committed to working with the independent sector as well as the major labels and publishers. We know that our community of over a billion music fans value the diversity and richness that independent music brings to our platform. We are committed to entering into direct deals with Merlin members in order to keep their music on TikTok.”
Dan Waite, chair of IMPALA's digital committee, said: “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 rights holders 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.”
IMPALA has a 10-step plan to make the most of streaming including sustainable remuneration from services such as TikTok.
Mark Kitcatt, chair of IMPALA’s streaming group, said: “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”.
Dario Drastata, IMPALA chair and chair of RUNDA Adria, added: “We believe giving labels the option to work under a collective deal is the best way for TikTok to achieve these aims and work with artists and genres from across Europe. We respect freedom of choice in entrepreneurship. The growth of the independent sector across all platforms is fundamental to provide fans and consumers with choice and adversity, exactly what TikTok stands for. The easiest way to achieve that is through Merlin.”
We invite TikTok to see the value of a renewed collective deal through Merlin
Helen Smith
The question of streaming manipulation has been flagged by both Merlin and TikTok. IMPALA’s 10-point plan urges the use of tools, including AI, to address unlawful activity that removes value from creators, such as streaming manipulation, ad-blocking, stream-ripping and AI rip-offs.
Helen Smith, IMPALA executive chair, said: “Dilution [in streaming revenue from such unlawful activity] is, of course, an issue in every deal and that will continue. It’s hard to see how direct deals could address this better than a Merlin deal. Surely the issues are better addressed on a collective basis in a standardised way? This feels like a smoke screen for boycotting Merlin given the history and the timing and the fact the whole industry is working hard on this important issue.”
In its statement, IMPALA also suggested that its concerns could “resonate with regulators who have already raised concerns about the way TikTok is operating, not only in the EU but in other jurisdictions”.
Helen Smith added: “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.”
AIM's interim CEO Gee Davy said: "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."
In a statement, IMPF said: "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."
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