Photo Credit: Hanyang Zhang

TikTok is actively signing direct licensing deals with independent labels following the expiration of its Merlin agreement on October 31st. The platform is implementing significant changes to its monetization structure and verification requirements.

Key Changes in New TikTok Deals:

• Payment structure now based on video views rather than new content creation
• Market share calculations determine payment distribution
• Removal of 'most favored nations' clause from contracts
• New 'know your customer' verification requirements for artists
• Expected 4% variation in payment amounts compared to previous terms

Industry executives report that while compensation terms remain largely similar to the Merlin agreement, TikTok's value lies primarily in promotion rather than direct revenue. The platform is considered one of the "smallest revenue earners" for music companies.

The shift began after TikTok declined to renew its Merlin partnership, citing concerns about content verification. UnitedMasters became the first major independent to secure a direct deal, with other labels now following suit despite initial resistance.

Label executives acknowledge limited negotiating power, noting that artists' demand for TikTok presence necessitates participation regardless of terms. The new verification requirements aim to combat AI-generated content and fraud, though responsibility now falls more heavily on labels and distributors.

This strategic move by TikTok represents a significant shift in the platform's relationship with independent music providers, potentially setting new standards for social media music licensing.

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