TikTok is now pursuing individual licensing deals with indie labels following the expiration of its Merlin agreement on October 31st. This shift marks a significant change in how TikTok handles music licensing and compensation.

Key Changes in TikTok's New Licensing Approach:

• Payment structure now based on views rather than new content creation
• Removal of 'most favored nations' clause from contracts
• Introduction of 'know your customer' verification requirements
• Similar compensation rates to previous Merlin agreement (approximately 4% difference)

Industry Response: Independent labels and distributors are divided on this development. While some hesitate to sign individual deals, others feel compelled to proceed for their artists' benefit. UnitedMasters has already secured its own licensing agreement with TikTok.

Financial Impact: According to industry executives, TikTok remains one of the smallest revenue generators for music companies. Its primary value lies in promotional opportunities rather than direct compensation.

New Security Measures: The 'know your customer' clause requires labels and distributors to verify artist identities before upload, aimed at preventing AI and bot-related fraud. This responsibility shift places more accountability on music providers rather than TikTok.

Photo Credit: Hanyang Zhang

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