Photo Credit: Hanyang Zhang

TikTok is actively signing direct licensing deals with independent labels following the expiration of its Merlin partnership on October 31st. This shift marks a significant change in how TikTok approaches music licensing and monetization on its platform.

Key Changes in New TikTok Deals:

• Compensation now based on song views rather than new content creation
• Removal of 'most favored nations' clause from contracts
• Addition of 'know your customer' verification requirements
• Market share calculations remain view-based, but without fixed per-view royalties

According to industry executives, the new payment terms are comparable to previous Merlin arrangements, with only an estimated 4% difference in revenue. Most labels view TikTok primarily as a promotional platform rather than a significant revenue source.

UnitedMasters became the first major independent entity to secure a direct deal with TikTok post-Merlin. While some industry executives remain hesitant to bypass Merlin completely, others are moving forward with direct deals to maintain their artists' presence on the platform.

The new 'know your customer' clause requires labels and distributors to verify artist identities before uploading music, aimed at preventing AI-generated content and bot manipulation. This responsibility shift places more accountability on music providers rather than TikTok.

Despite industry concerns about fragmentation, TikTok maintains these changes will benefit the independent music community while improving content verification processes.

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