TikTok has begun signing direct licensing deals with independent labels following the expiration of its Merlin agreement on October 31st. Here's what's changing in these new arrangements.

Key Changes in TikTok's New Licensing Approach:

• Payment Structure: TikTok now pays music licensors based on view counts rather than new content creation
• Revenue Impact: Most labels report minimal financial changes, with approximately 4% difference in earnings
• Contract Terms: New agreements remove the 'most favored nations' clause that guaranteed equal terms across licensors
• Identity Verification: Added 'know your customer' clause requiring labels to verify artist identities before uploads

Industry Response:

Independent labels are divided on how to proceed. While some hesitate to sign without Merlin's involvement, others feel compelled to maintain their artists' presence on the platform. UnitedMasters has already secured its own licensing deal.

Most executives view TikTok primarily as a promotional tool rather than a significant revenue source, describing it as one of the "smallest revenue earners" for music companies.

The platform's new verification requirements aim to combat AI-generated content and streaming fraud, though this responsibility now falls primarily on labels and distributors rather than TikTok itself.

Photo Credit: Hanyang Zhang

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