TikTok rival Triller is once again facing a lawsuit over allegedly unpaid music licensing fees.
This time, the music organization suing Triller is Merlin, the digital music licensing group for indie labels, distributors, and other rightsholders.
In a complaint filed on Thursday (March 27) in the US District Court for the Southern District of New York, and obtained by MBW, Merlin alleged that Triller violated a licensing agreement the two had signed in 2020.
According to the complaint, that agreement included a “most favored nation (MFN)” clause that requires Triller to make up the difference to Merlin if it offered higher licensing fees to another music company.
Merlin says it found out via a previous lawsuit against Triller (filed in 2022) that the short-form video platform had offered higher fees to another record company.
Merlin’s complaint doesn’t identify that other music company, but it appears to be Sony Music Entertainment, which sued Triller in August of 2022 alleging non-payment of “millions” of dollars in licensing fees for Sony-owned music used on the platform.
Sony and Triller eventually came to an agreement under which Triller agreed to pay the music company $4.57 million, but in the course of the lawsuit, Merlin evidently found out that Triller had given Sony a better licensing deal than it had signed with Merlin. This meant that Triller was now on the hook to pay the difference to Merlin.
Merlin and Triller “came to an understanding” that the former owed the latter $2.55 million, but Triller never made the payment, Merlin’s complaint alleges.
The complaint also alleges that Triller reneged on another part of its agreement with Merlin. As part of the 2020 licensing agreement, Triller gave Merlin a warrant for a certain amount of its stock – meaning it gave Merlin the right (but not the obligation) to buy a certain amount of Triller stock at a certain set price.
“Merlin has still not received information regarding how Triller intends to handle the matter. Merlin was promised new warrants in November, and Triller has yet to deliver those warrants.”
Merlin, in a legal complaint against Triller
Merlin alleges that its agreement with Triller required the social media platform to honor that warrant even if the company were sold or merged with another firm.
And Triller did indeed go through a merger. After numerous failed attempts to get listed on the stock market, Triller finally succeeded last year by way of a merger with AGBA, a Hong Kong-focused financial services firm.
The newly merged Triller Group began trading on the NASDAQ in October. Merlin alleges that its warrant for Triller stock should have been converted to a warrant for an equivalent amount of stock in the new Triller Group, but that didn’t happen.
“Triller… failed to comply with the terms of the warrant, including by failing to confirm, in a written instrument, that the successor company to Triller Hold Co LLC would assume the obligation to deliver to Merlin such units, securities or assets that Merlin is entitled to pursuant to the warrant,” states the complaint, which can be read in full here.
“Merlin has still not received information regarding how Triller intends to handle the matter. Merlin was promised new warrants in November, and Triller has yet to deliver those warrants.”
The lawsuit asks the court for $2.55 million in licensing fees plus interest, and for the court to order Triller to honor the warrant Triller had given Merlin, or otherwise to award damages for failure to do so.
The Merlin lawsuit is the latest in a growing series of lawsuits against Triller, which evidently experienced financial problems before its merger with AGBA last year.
Besides the Sony lawsuit, Triller was also sued by Universal Music Group in 2023 over unpaid licensing fees. More recently, a hedge fund owned by investment manager Yorkville Advisors sued Triller over an allegedly unpaid debt of $33.5 million. That debt had evidently been taken on by AGBA, the other company in last year’s merger.
In a filing with the Securities and Exchange Commission in early 2024, ahead of a proposed IPO, Triller disclosed that it owed more than $23 million in unpaid music licensing fees.
As part of the merger, the new Triller Group set aside 50 million shares to be “applied toward future settlement of certain Triller legal and financial obligations.” When Triller Group began trading last October, those shares would have been worth $222.5 million.
Triller also secured $50 million in an equity funding round in January that was led by KCP Holdings, which acquired $14 million worth of Triller Group equity at $2.20 per share.
Triller stock was trading $0.64 per share as of mid-morning on Monday (March 31).Music Business Worldwide
