Dear Merlin Member,
On August 5th, we informed you that we expected a difficult negotiation with TikTok.
This past Wednesday, with no warning, TikTok walked away before negotiations even began. They informed us that (1) they do not want to renew our deal, which expires on October 31st, and (2) they intend to license some of our members directly. To be even more clear, unfortunately, as of now, there will not be a Merlin-TikTok deal after October 31st.
We believe the most likely reason that TikTok did this is that TikTok does not want to pay a fair rate for the music that powers their platform. If this is right, then TikTok does not value independent music, the independent labels and distributors who support that music, nor the diverse artists who create it. They are unlike every other partner that Merlin works with.
TikTok pays substantially less for your music than other services, apparently relying on the perception that artists cannot afford to have their music unavailable on the platform. We made a good faith proposal to narrow this gap, but rather than negotiate, TikTok chose to simply walk away.
Given that TikTok refused to negotiate with us, our view is that they must see the obligation to pay fair royalties as a nuisance. They must view Merlin – with its mission to protect and maximize the value of our members’ music – as too strong a negotiating partner for their liking. Their approach suggests that they believe their objectives can be better served by fragmenting the Merlin membership, in order, we believe, to minimize their pay out.
TikTok has asked us for an “orderly transition” to do direct deals with those members they deem worthy. As you know, Merlin was founded to stand up for and champion its members. We will not support an approach that devalues our community.
The Merlin team remains dedicated to forging meaningful relationships between our members and partners, as well as driving value into every partnership. This includes dedicated teams to answer member inquiries across every aspect of our partnerships, operational support, best practices guides, partner-led and Merlin-led webinars, consolidated pitch forms, and so much more.
We are doing all we can to re-engage with TikTok to secure a renewal agreement for our members. We have already made it clear to them that we are ready to hold an actual negotiation and address any concerns they may have. TikTok has also suggested that they are walking away because of concerns about “fraud,” but as we have told them on numerous occasions, we are incredibly pro-active on this issue.
We recognized early on, and communicated with TikTok, the concerning growth and impact of stream manipulation and fraudulent content both on TikTok and across the marketplace. We have worked productively and collaboratively with TikTok on this issue, and until now, no concerns have been raised about the approach Merlin is taking. We have implemented measures to address illegitimate activity and content; automated systems to detect suspicious activity; and a dedicated team to address issues and impose sanctions, including ultimately, termination of membership for bad actors.
Members must, as ever, make their own decisions on how to deal with TikTok. For our part, we will never stop fighting for the value that our members bring, regardless of how this situation resolves itself.
We will follow-up by separate email with whatever answers we might have on your operational questions.
