It’s true: MBW has confirmed that TikTok recently scrapped re-licensing discussions with Merlin, despite the indie group’s current deal with the ByteDance platform expiring on October 31.
Instead of agreeing a blanket deal with Merlin, TikTok is instead inviting individual Merlin members to negotiate direct licensing deals with its team.
Merlin claims that its members represent 15% of global recorded music consumption by market share. So why would TikTok walk away from the negotiating table?
The reason is something of a shock: as industry discussion over streaming fraud grows ever-louder, TikTok has called into question the legitimacy of music delivered to its platform by certain Merlin members.
It’s important at this point to clarify three things:
- Merlin’s membership spans tens of thousands of labels and distributors in virtually every major territory worldwide;
- Sources suggest that the illegitimate behavior from Merlin members that’s concerned TikTok mainly involves the deliberate uploading of manipulated (read: sped up and slowed down) versions of copyrighted audio (a trend MBW investigated earlier this year).
- It’s understood that a significant amount of this activity detected by TikTok amongst Merlin members has originated in three global territories: Eastern Europe, Latin America, and Southeast Asia.
A TikTok spokesperson told MBW this evening that the platform has “had operational challenges with Merlin in the past where music that is not quality controlled for copyright is delivered [to TikTok].
“It presents a big burden, and doing direct deals allows us to exercise better control and also to forge closer relationships with Merlin members.
“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.
“We believe that we will have better control over the catalogs of music being uploaded by Merlin members if we do direct deals, rather than doing the one big aggregate deal.
“In the past we’ve had issues with some of the music that comes through that aggregate deal, in terms of fraudulent behavior.”
Speaking with MBW, Ole Obermann, Global Head of Music Development and IP at TikTok, commented: “This isn’t about bad blood with Merlin. By doing direct deals, if we detect any kinds of content copyright issues, we can address it directly. It’s that simple.”
Merlin told its membership in a letter last week that TikTok had “refused to negotiate” a new licensing deal ahead of the expiry of TikTok/Merlin’s current deal on October 31.
Merlin claimed that TikTok “walked away before negotiations even began” and with “no warning”.
In the letter issued to Merlin members, seen by MBW, the organization pointed to TikTok’s “concerns” about streaming “fraud” as a reason behind its decision to let the deal lapse.
Merlin argued in its letter that it is “incredibly pro-active on this issue” and that it “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.”
Streaming fraud remains a major headache for the music industry. The practice threatens to suck money out of the streaming business that would have otherwise been paid to legitimate artists and rightsholders.
In Q1 2024, Spotify introduced a policy to financially penalize labels and distributors per track when “flagrant artificial streaming” is detected on their content, which the company said would act as a “deterrent” against artificial streaming.
Global law enforcement agencies are also starting to take streaming fraud very seriously.
Just last month, the US Government charged an individual with three felony counts in connection with an alleged $10 million “scheme to create hundreds of thousands of songs with artificial intelligence and use automated programs called ‘bots’ to stream the AI-generated songs billions of times”.
In March, a man in Denmark was sentenced to 18 months in prison, after he was found guilty of data fraud and copyright infringement. The man allegedly used bots to artificially inflate the stream count on 689 tracks he had uploaded to streaming platforms.
“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.”
Merlin
Merlin, in the letter sent to its members last week about its collapsed TikTok talks, said that it has “worked productively and collaboratively with TikTok” on the streaming fraud issue, adding that “until now, no concerns have been raised about the approach Merlin is taking”.
The letter added: “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.”
TikTok’s spokesperson added today that “TikTok has the utmost respect for the independent music community and artists and is committed to offering all the world’s music on the platform.”
They added: “We are confident that by working directly [with Merlin members] we will be able to avoid disruption.
“Labels that wish to continue to make their music available on TikTok after October 31st simply need to review and sign the agreements for TikTok and CapCut before October 25th 2024.
“This means that content will not be taken down and there will be no need to redeliver any content, and the catalogue will remain on the platform from 1st November 2024.”Music Business Worldwide