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UnitedMasters has reached a new multi-year licensing agreement with TikTok. News of the deal comes just weeks after Billboard broke the news that TikTok “walked away” from talks to renew its license with Merlin, a collective that negotiates digital licensing deals for more than 30,000 indie labels and distributors.
Instead, TikTok noted that it wished to forge deals with most of the labels and distributors individually and cited previous issues with Merlin’s members delivering “fraudulent content” as the reason why they were not renewing with Merlin. Merlin read this move as TikTok “fragmenting” its membership to try to “minimize” licensing payments for indie music.

UnitedMasters — which has worked with more than 2 million independent artists, including FloyyMenor, Brent Faiyaz, BigXthaPlug, Tobe Nwigwe and Anycia — will include its full, expansive catalog in the new deal. The agreement will also provide additional commercial opportunities for UnitedMasters artists via TikTok’s Commercial Music Library.

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A press release states that TikTok and UnitedMasters “share the vision and understanding that commercial use of music on platforms offers significant revenue and promotional opportunities for artists” — and that having access to TikTok’s Commercial Music Library will give UnitedMasters talent access to new revenue and promotional streams for their talent.

Beyond just TikTok, licensing music for commercial purposes is a crucial focus for UnitedMasters. Previously, it has landed its artists deals with major brands like Bose, Walmart, ESPN, Coca-Cola, IKEA, Dove and more.

“Our partnership with TikTok provides UnitedMasters artists unparalleled access to a vast global audience, while TikTok creators and users gain early exposure to some of the most impactful independent music today,” said Steve Stoute, founder/CEO of UnitedMasters, in a statement. “TikTok recognizes the power of music and creativity, which is why we are excited to formalize this partnership.”

“TikTok has proven that it’s a launchpad for artists, turning viral moments into chart-topping hits,” Stoute added. “With this partnership, I look forward to seeing our artists thrive on TikTok and extend their reach and influence across the music industry. We’re building a future where they can own their success and grow their careers on their own terms.”

“We want to make the world’s best music available to our global community of over a billion music fans,” added Ole Obermann, head of music business development at TikTok. “That’s why we are so excited to be entering into a direct deal with a prominent independent label like UnitedMasters, with its deep, diverse roster of independent artists. Together, we’re ready to amplify these voices and bring their music to a global stage, unlocking new opportunities for discovery.”

Merlin’s license with TikTok is set to expire on Oct. 31. Labels or distributors that have not reached an individual agreement with TikTok by then will become unlicensed and removed from the platform.

Billie Eilish isn’t interested in going viral on TikTok — at least that’s the message she gives in a Saturday Night Live sketch about the social media platform.
During SNL‘s Michael Keaton-hosted episode on Oct. 19, the 22-year-old pop star made a cameo in a nearly four-minute sketch, aptly titled “TikTok,” in which she brushes off influencer Harry Daniels (played by Bowen Yang), who’s made a name for himself by singing to random celebrities on TikTok.

“Excuse me, Miss Eilish, can I sing to you?” Bowen’s Daniels requests as he accosts Eilish in hallway and quickly belts out a tune. Clearly annoyed, the “What Was I Made For?” hitmaker quickly interrupts him with a lucrative request. “Here’s 10 grand, please stop following me,” she says, handing him a wad of cash and scurrying off.

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Daniels has indeed encountered Eilish in real life, as seen in videos on his TikTok account, which boasts 1.6 million followers. During the SNL skit, Bowen’s Daniels also sings to Maya Rudolph’s Kamala Harris and James Austin Johnson’s Donald Trump

The pre-recorded “TikTok” sketch featured a person doomscrolling through their social media tread, encountering clips of a cat dancing to SNL cast member’s Marcello Hernandez viral cover of Sabrina Carpenter’s “Espresso,” Chloe Fineman playing Call Her Daddy podcast host Alex Cooper and Kenan Thompson portraying a foodie reviewing a Fruity Pebble-covered chicken sandwich from his car.

Elsewhere during the episode, Eilish appeared for the fourth time as musical guest, performing Hit Me Hard and Soft album tracks “Birds of a Feather” and “Wildflower” alongside her brother Finneas. She previously performed on SNL in 2019 and 2023, pulling double-duty in 2021 as host and musical guest. Her appearance with Keaton follows last week’s Ariana Grande-hosted episode, which featured live performances from Stevie Nicks.

Watch SNL‘s “TikTok” sketch below. For those without cable, the broadcast streams on Peacock, which you can sign up for at the link here. Having a Peacock account also gives fans access to previous SNL episodes.

Ricky Montgomery began rehearsing for his tour in late January. The singer/songwriter played shows across America before heading to Europe, Asia and Australia, returning to the U.S. in June. “It had been a long year, and I was also sick,” he says. That’s when he found out his label had dropped him. 
“There was a disconnect as far as creative direction,” he explains. “The label didn’t really know what to do with me, and instead of listening to my ideas, they just tried to apply standard pop templates. Ed Sheeran was the one they thought would work.”

That “disconnect” is the subject of Montgomery’s upcoming single, a downcast acoustic ballad out October 24 called “Superfan.” He sings with a deflated quaver: “Team just got the numbers in/Said try it more like Ed Sheeran/But he’s not me, and I’m not him.”

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Being dropped hasn’t hurt Montgomery’s career, though. In fact, he’s now earning more streams — around 2 million streams a day across his catalog — than he was previously. “For better or worse, it’s a social media content game now,” says the 31-year-old singer, who has close to 2 million TikTok followers. “So if you’ve been investing your time into that, the odds are that you’re going to be totally fine if a label decides to drop you.” 

Getting dropped is in vogue this year: Two of the biggest breakout artists of 2024, Chappell Roan and Shaboozey, were both cut by major labels before their recent explosive success. And more acts could soon join their ranks, because the major labels have been cutting costs by slashing staff — and dropping artists.

“Each time there have been major staff layoffs across the label systems, concurrently there were artists released from rosters,” says Leon Morabia, a partner at Mark Music & Media Law. “Some artists are really happy about it and relieved, and some artists are very upset. Their reaction ultimately depends on how much they depend on the record company to do what they do.” 

Dropped acts lose access to an extended support team; plans for upcoming releases must be jettisoned or heavily reworked; tours can be scrapped. That said, Lulu Pantin, founder of loop legal, is adamant that “being dropped has no bearing on long-term success.” And this is probably more true than ever. 

During a recent interview with Bloomberg, Sony Music CEO Rob Stringer pointed out that when he joined the music industry in 1985, labels had a lock on manufacturing, distribution and radio. “We had a lot more power,” he said. Today, in contrast, “the artists have at the very least equal power to us.” 

That’s because they can make music cheaply, and promote it internationally, without ever leaving the house. “Artists have to be as good, if not better, at marketing as any professional marketer now,” Montgomery says. “They are, by default, the most experienced person in the room in marketing meetings.”

At the same time, the buttons that labels can push — to get radio play, appearances on award shows and late-night television, and prominent press placements — no longer guarantee real fans. As a result, Montgomery says, “Labels only want to focus on Tiktok or Reels or YouTube Shorts right now. I had three times as many meetings about TikTok strategy as I did about music. There’s no reason you can’t do that stuff on your own.”

Still, getting dropped can be jarring, a corporate version of a breakup. And like a breakup, disentangling takes a while, as it requires additional negotiation between the artist’s team and the label. “It’s not just, someone waves a magic wand and then you’re dropped,” says an A&R who left a major label job earlier this year. 

This legal wrangling can be crucial for the next phase of an artist’s career. In a typical record deal, the label enjoys exclusive rights to any songs delivered during the contract period — even if they haven’t come out yet. For artists who are being shown the door, then, “the key point is who gets ownership of the unreleased music,” Pantin says.

Record companies are reluctant to give these rights up, since they helped fund the songs’ creation. To secure the return of unreleased music, artists may have to give the label a concession, either in the form of “an ‘override’ payment or a royalty on sales and streams,” Pantin adds. 

If the label refuses to give up the rights to unreleased songs, artists have one other option. “I’ve called labels and asked them to waive the re-recording restriction,” says Tiffany Almy, founder of PKA Law. The re-recording restriction is in place to prevent an artist from putting out a competing version of a song the label already released, a tactic made famous by Taylor Swift with her Taylor’s Version album re-recordings. But the restriction serves no purpose if the label never put out the track in the first place. And if the artist succeeds in convincing the record company to nix that provision, they can then re-cut their music  — on their own dime this time — for release.

Another point of negotiation when artists and labels are uncoupling: The act may be able to obtain some additional money, depending on the structure of their contract. “The deal could be worth $500,000, and $150,000 is given to the artist on signing and the rest is for recording,” the former A&R executive explains. “Then when you deliver the album, whatever’s left from the fund is supposed to go into the artist’s pocket.” 

Attorneys try to prepare for these situations long before the label is even thinking about trimming rosters by including what’s known as “a pay-or-play provision” in the artist’s initial contract. (The initial deal negotiation period is when lawyers push for other protections as well: “I always try to build in caveats that the re-recording restriction doesn’t apply if the track doesn’t get released within a certain period of time,” Almy says.)

The pay-or-play clause ensures that, “If you get dropped in the middle of the contract period, you will be entitled to at least a portion of the remainder of the fund,” explains Oren Agman, an entertainment attorney. “Labels are now capping that, so they’ll give you maybe 30% or 40% of the balance. [But] if you have no pay-or-play provision, then you’re not getting anything other than the advance.” Jodie Shihadeh, a music lawyer, calls this provision “one of the last key points” when negotiating a record deal. 

While the lawyers for both sides go back and forth after an act is dropped, the artist may be stuck twiddling their thumbs. “I’ve seen labels delay responses for months, extending the process and keeping artists in limbo,” Pantin says.

That limbo period matters because an artist technically can’t sign a new deal before getting out of the old agreement. Some do so anyway, figuring a label that dropped them isn’t likely to spend money suing them for breach of contract. “It can be a game of chicken,” the former A&R notes. 

For an artist’s collaborators, it may be more than that — they don’t have the potential cushion of a pay-or-play clause. Many labels give a producer half their fee for a track up front, and fork over the rest only when that track comes out, Almy says. A dropped artist may mean a shelved track; for a producer, a shelved track represents lost income. “I’ve called the A&R at the label that dropped the artist and asked them to consider paying the producer for the work that they already did,” Almy says. Mixers are often in the same predicament. 

Artists have it easier, because they can just start recording and releasing as they see fit. “I’ve seen some artists where it really helped that they got dropped, even though they didn’t want to be,” Shihadeh says.

Another recent post-drop success story is Gigi Perez, who parted ways with Interscope earlier this year. “I was stuck inside of a machine that didn’t work or make sense for me and I was unhappy,” she wrote in a lengthy message on Instagram on March 8. “I think a ton of artists were/are in this position as this new model of the music industry changes.” 

She ended her post on an upbeat note: “Let’s go, bitches.” And in July, she released “Sailor Song,” a muscular folk track that works as well in an arena as it does around a campfire. It proved to be effective on TikTok as well: Users were soon soundtracking tens of thousands of videos with at least three different snippets of the single. 

Streams of “Sailor Song” shot up. And on October 8th, Perez announced a new label home: Island Records.

Instagram announced a new feature on Thursday (Oct. 18) that makes it easier for users to save songs they discover while perusing the app.
The social app aims to make the music-saving process as frictionless as possible — and users don’t have to leave Instagram to do it. If they find a song they like, they can simply click on the track to reach its audio page and then tap the “add” button. Saved tracks show up in their “Liked Songs” playlist on Spotify. Currently, no other streaming services are integrated with Instagram.

The Spotify-Instagram integration comes roughly a year after TikTok launched its “Add to Music App,” a very similar feature that allows users to save music they find on the platform. TikTok had more partners for its feature — not just Spotify initially, but also Amazon Music and Apple Music.

“TikTok is already the world’s most powerful platform for music discovery and promotion, which helps artists connect with our global community to drive engagement with their music,” Ole Obermann, TikTok’s global head of music business development, said in a statement last year. The new feature “takes this process a step further, creating a direct link between discovery on TikTok and consumption on a music streaming service, making it easier than ever for music fans to enjoy the full length song on the music streaming service of their choice, thereby generating even greater value for artists and rights holders.”

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The “Add to Music App” has become even more of a priority for TikTok recently. In September, the company announced that it was shutting down its subscription streaming service, TikTok Music, to focus more on integrating with existing streamers. “Our Add to Music App feature has already enabled hundreds of millions of track saves to playlists on partner music streaming services,” Obermann said.

On Wednesday (Oct. 16), TikTok announced that another streaming service would join the “Add to Music App”: Melon, which is popular in South Korea.

“Since the launch of Add to Music App, we have seen the TikTok community fully embrace the opportunity to save the songs they discover to the music streaming service of their choice,” Michael Kümmerle, global head of music partnership development, said in a statement. “Our new partnership with Melon means that millions more music fans in Korea will be able to save, share and listen again to music they fell in love with on TikTok.”

In July, popular influencer/podcast host Tinx took to TikTok to ask her followers a question: “Are labels and artists asking random people to make content about music and not say[ing] it’s an ad?” The answer in the over 700 replies to the video was a resounding and simple “yes.”
“Sound campaigns” have been an integral part of music marketing since TikTok took off in 2019, but they differ from other paid promotion campaigns on social media. Captioning a video with #ad, or another similar disclosure, is required by the Federal Trade Commission (FTC) when companies “pay you or give you free or discounted products or services” in exchange for featuring their product in a video, but that has never been the standard for the paid promotion of a song. “Any essence of perceived authenticity can be stripped away when a creator tags a video as paid,” says one digital marketing agency CEO. 

As a result, one major label marketer believes “75% of popular songs on TikTok started with a creator marketing campaign,” but says that there’s no way to actually track how many of the songs that go viral on TikTok do so organically or are boosted by thousands to hundreds-of-thousands of dollars’ worth of paid promo.

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When asked for clarification about whether or not promoting songs in the background of videos requires disclosure, a representative for the FTC said, “While we can’t comment on any particular example, that practice seems somewhat analogous to a product placement… When there are songs playing in the backgrounds of videos, there are no objective claims made about the songs. The video creator may be communicating implicitly that they like the song, but viewers can judge the song themselves when they listen to it playing in the video. For these reasons, it may not be necessary for a video to disclose that the content creator was compensated for using a particular song in the background in the video. We would evaluate each case individually however.”

While it is not, in most cases, an FTC violation to run undisclosed creator campaigns to promote singles on TikTok, Instagram Reels or YouTube Shorts, it remains a little-understood area of music marketing that many music fans are not aware is happening. “The beauty of Tiktok, for me, has disappeared because I’m super cynical and believe everything I see there, disclosed or not, is paid to be promoted,” says the digital marketing agency CEO. (Most of the sources in this story requested anonymity in order to speak freely about how these campaigns work.)

Often, digital marketing gurus will reminisce about the days of the Hype House bros and the D’Amelio’s TikTok reign, around the onset of the COVID-19 pandemic, which were considered the good ol’ days for creator marketing. At the time, it was expected for successful TikTok virality to translate into boosts in streams practically every time. “Back then, it made sense to pay over $10,000 a video for those famous kids to post your song. There was a high probability of [return on investment] ROI in 2020,” says a second digital marketing agency CEO. One creator manager says they remember a top creator at the time boasting about getting “$50,000 to just play the sound” in the background of a TikTok. 

Typically, these creators would be instructed by an artist manager, a label, or a third-party digital marketing company (most times the latter) to perform a certain trend along with the song, like a dance or a certain filter, in exchange for money.

But these days, experts like George Karalexis, CEO of YouTube marketing and rights management company Ten2 Media, say it’s “more expensive and harder than ever to start a trend” online. As Billboard reported in 2022, TikTok tracks in the U.S. were streamed far less that year than they were in 2021, according to the most recent available data from Luminate.

Now, this unpredictability has led to top creators rarely fetching rates of over $10,000 for the use of a song in a video. Instead, digital marketers are spreading their budgets over many videos from smaller creators to make the illusion of a less-detectable groundswell of support. The second digital marketing agency CEO says today’s payment ranges from $25 for a micro creator (at or below about 10,000 followers) to $10,000 for a TikTok star to post the song.

Recently, a cottage industry of startups has popped up in the creator campaign space, automating the connection between smaller creators and artists looking to pay them to promote their songs. One of the leading companies, Sound.Me, for example, recently ran a creator campaign for “A Bar Song (Tipsy)” through their service. TikTok is also offering up a similar service with its “Work With Artists” feature inside the app, which allows qualifying creators (those with over 50,000 followers and living within a certain territory) to get paid to use songs, like Halsey’s cover of “Lucky,” in their videos. 

Even when an artist is willing to spend a significant budget on one particular creator, that doesn’t mean the creator will always accept. Sound promos are known to be less lucrative for creators than other brand deals, like fashion or skincare, and thus it’s common for top creators to “shoot [the artist’s team] an outrageous number, knowing a sound campaign is not necessarily worth their time otherwise,” says the creator manager. 

It is also far less common to ask for a specific type of video from a creator today. Instead, the second digital marketing CEO says “it’s not really about pushing specific creative. It’s just about finding the right creators for the artist’s target audience and kind of just letting the influencers run with creative freedom.”

All of this makes discerning the paid promotion of a song from organic enthusiasm more challenging than ever. Even more complicated, the creator manager says that it’s “best practice” for creators “who want to work with a specific brand to show for free that they are using the brand’s products anyway to attract their attention. Same goes for songs.” 

The sign of true success for these campaigns is when social media use of the song grows far beyond the initial budget, encouraging unpaid creators to jump in and use the track, too, multiple digital marketing sources say. “The value is in the people [using the song] that aren’t being paid,” says Jeremy Gruber, head of artist marketing and digital strategy at management company Friends at Work. “Success is when we have 13 types of videos going on at once to the song,” adds one indie label marketer. “We can’t even tell what’s happening.”

Typically, these sound campaigns are conducted in phases, and while they are common, they are not expected for every single release, three label marketing sources say. $5,000 is the low-end for what two digital marketing agencies believe would be a fruitful campaign, but the spending can grow to $80,000 (or even into the six figures for rare cases) if it is a big-name artist and the song is reacting positively. Typically after the first round of the campaign, the team will watch and see if the song grows. If it does, then a next wave of spending will be opened up and seeded out to creators to stoke the flame. 

Gruber believes an ethical gray area arises when artists’ teams offer money to music curation influencers to explicitly recommend a song without disclosing the transaction to viewers. Unlike a “product placement”-like promotion which simply streams in the background, these music curators use TikTok to talk to the camera, telling consumers to take action and check out new songs in exchange for undisclosed money, concert tickets or other perks. When asked about this type of promotion specifically, the FTC declined to comment on whether or not disclosure is needed. 

It’s also common for record labels to turn to social media-based blogs, typically in the rap genre, like WorldStarHipHop, Rap, Our Generation Music and more which offer pay-to-play promotion on TikTok and other social platforms to create the appearance of organic online chatter. In one message exchange, reviewed by Billboard, a representative from Rap told a music company that “solo” posts go for $1,000, but they offer discounted rates for ordering in “bulk.” Typically, these payments are not disclosed to consumers. 

While it might come as a surprise to some music lovers to learn how often these paid campaigns are used, the general consensus among the eight sources spoken to for this story is that it isn’t harming anyone to do it —at least not in the types of campaigns that resemble product placements. “Music, to me, is this beautiful art form and it is completely different from other ‘products’ in other industries [that run creator campaigns],” says the first digital marketing agency CEO. “We do feel that ethically we’re promoting content that is a net positive to society.”

It may not be as effective as it was a few years ago, but creator campaigns are largely believed to still be essential to market songs today, whether it’s on TikTok or on Instagram Reels or YouTube Shorts (which is increasingly common). Says the second digital marketing agency founder: “It’s still the best thing we have.”

This story was published as part of Billboard’s new music technology newsletter ‘Machine Learnings.’ Sign up for ‘Machine Learnings,’ and Billboard’s other newsletters, here.

From serenading celebrities with surprise cover songs to releasing his own original music, Harry Daniels delivered his debut single “I’m Him” first thing Thursday (Oct. 17). The electro-pop song, which made its radio debut on New York’s Z100 first thing Thursday, was inspired by Daniels’ rise to fame as a viral star on TikTok, where […]

TikTok’s decision to boycott Merlin and pursue direct deals with Merlin’s member labels is a troubling move that undermines the rights of labels to choose how their music is licensed. While TikTok frames this shift as a way to tackle streaming fraud, it’s clear that the real motive is to weaken the bargaining power of independent labels and use that leverage to suppress rates.
Merlin has built strong partnerships over the last 16 years with more than 40 digital services worldwide. These partners recognize the value Merlin brings—efficiency, scale, and a deep understanding of the independent music community. TikTok’s move to sideline Merlin is not about protecting against fraud but about undermining the ability of independent labels to achieve competitive terms, not just now but for the long term. The ultimate consequence of its refusal to negotiate with Merlin for the music that earns TikTok billions of dollars, will be to damage artists’ ability to make a living from their art. 

This tactic is not new. It echoes the historical struggles of the music industry with partners such as terrestrial radio and MTV, both of which profited massively from the use of recorded music while refusing to pay artists under the pretext of “promotional value” or “exposure” — ostensibly for the sale of an artist’s CDs or LPs. In this largely digital economy the stream is the sale – and it has been widely reported that TikTok pays rights holders far less than other services for equivalent uses of music. 

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Richard James Burgess, President and CEO of A2IM

Independent labels choose Merlin to license their rights, because of its expertise, experience and track record in striking these kinds of deals. This ensures compensation at levels enabling them to compete with the majors and protects independents from being unfairly exploited. TikTok’s decision to bypass Merlin and demand direct deals is an assault on the freedom of small and medium sized enterprises to determine their own business strategies. The fact that TikTok is giving Merlin members a matter of days to accept TikTok’s terms or lose access to its massive platform, is an unfair exercise of its market power.

This apparent divide-and-conquer strategy is, we believe, designed to keep payouts for indie artists low by exploiting their perceived reliance on TikTok’s platform. It’s not about addressing fraud or improving the digital music ecosystem. In fact, by exponentially multiplying the number of license deals TikTok will need to strike and by losing Merlin as a partner in the fight against fraudulent material, more fraud is likely to ensue. Merlin simplifies licensing, making it easier for platforms to access diverse, independent music. Fragmenting this system hurts artists and fans and will limit the range of music available on TikTok.

At its core, this issue is about respecting the rights of independent labels to determine how their music is licensed. TikTok’s behavior doesn’t reflect a problem with Merlin; it reflects TikTok’s lack of respect for the value of music. Every other major platform has struck responsible deals with Merlin that balance the needs of the service with optimized compensation for artists. TikTok’s refusal to do so sets a dangerous precedent for recording artists and their labels.

TikTok must stop undermining and disrespecting the independent music community. It can do this by working with the labels’ rights management agency of choice to establish a fair, transparent licensing system that benefits all stakeholders in the music ecosystem. Independent labels have the right to choose their representatives to negotiate deals that truly reflect the value of their artists’ creative contributions. Anything less is a disservice to the artists and the fans and undermines the very fabric of music culture.

Dr. Richard James Burgess is an acclaimed musician, singer, songwriter, record producer, composer, author, manager, marketer and inventor, who presently serves as the president and CEO of the American Association of Independent Music (A2IM).

Spotify subscribers in 97 countries will no longer have to leave the app to watch their favorite artists’ music videos, the company announced on Tuesday (Oct. 15). The beta test, which started earlier this year in around a dozen countries — including the U.K., Germany, Brazil and Colombia — will also expand to South Korea […]

More than a dozen states and the District of Columbia have filed lawsuits against TikTok on Tuesday, alleging the popular short-form video app is harming youth mental health by designing its platform to be addictive to kids.
The lawsuits stem from a national investigation into TikTok, which was launched in March 2022 by a bipartisan coalition of attorneys general from many states, including California, Kentucky and New Jersey. All of the complaints were filed in state courts.

At the heart of each lawsuit is the TikTok algorithm, which powers what users see on the platform by populating the app’s main “For You” feed with content tailored to people’s interests. The lawsuits also emphasize design features that they say make children addicted to the platform, such as the ability to scroll endlessly through content, push notifications that come with built-in “buzzes” and face filters that create unattainable appearances for users.

In its filings, the District of Columbia called the algorithm “dopamine-inducing,” and said it was created to be intentionally addictive so the company could trap many young users into excessive use and keep them on its app for hours on end. TikTok does this despite knowing that these behaviors will lead to “profound psychological and physiological harms,” such as anxiety, depression, body dysmorphia and other long-lasting problems, the complaint said.

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“It is profiting off the fact that it’s addicting young people to its platform,” District of Columbia Attorney General Brian Schwalb said in an interview.

Keeping people on the platform is “how they generate massive ad revenue,” Schwalb said. “But unfortunately, that’s also how they generate adverse mental health impacts on the users.”

TikTok does not allow children under 13 to sign up for its main service and restricts some content for everyone under 18. But Washington and several other states said in their filing that children can easily bypass those restrictions, allowing them to access the service adults use despite the company’s claims that its platform is safe for children.

Their lawsuit also takes aim at other parts of the company’s business.

The district alleges TikTok is operating as an “unlicensed virtual economy” by allowing people to purchase TikTok Coins – a virtual currency within the platform – and send “Gifts” to streamers on TikTok LIVE who can cash it out for real money. TikTok takes a 50% commission on these financial transactions but hasn’t registered as a money transmitter with the U.S. Treasury Department or authorities in the district, according to the complaint.

Officials say teens are frequently exploited for sexually explicit content through TikTok’s LIVE streaming feature, which has allowed the app to operate essentially as a “virtual strip club” without any age restrictions. They say the cut the company gets from the financial transactions allows it to profit from exploitation.

Many states have filed lawsuits against TikTok and other tech companies over the past few years as a reckoning grows against prominent social media platforms and their ever-growing impact on young people’s lives. In some cases, the challenges have been coordinated in a way that resembles how states previously organized against the tobacco and pharmaceutical industries.

Last week, Texas Attorney General Ken Paxton sued TikTok, alleging the company was sharing and selling minors’ personal information in violation of a new state law that prohibits these practices. TikTok, which disputes the allegations, is also fighting against a similar data-oriented federal lawsuit filed in August by the Department of Justice.

Several Republican-led states, such as Nebraska, Kansas, New Hampshire, Kansas, Iowa and Arkansas, have also previously sued the company, some unsuccessfully, over allegations it is harming children’s mental health, exposing them to “inappropriate” content or allowing young people to be sexually exploited on its platform. Arkansas has brought a legal challenge against YouTube, as well as Meta Platforms, which owns Facebook and Instagram and is being sued by dozens of states over allegations its harming young people’s mental health. New York City and some public school districts have also brought their own lawsuits.

TikTok, in particular, is facing other challenges at the national level. Under a federal law that took effect earlier this year, TikTok could be banned from the U.S. by mid-January if its China-based parent company ByteDance doesn’t sell the platform by mid-January.

Both TikTok and ByteDance are challenging the law at an appeals court in Washington. A panel of three judges heard oral arguments in the case last month and are expected to issue a ruling, which could be appealed to the U.S. Supreme Court.

Over the last decade or two, there have been dozens of difficult licensing negotiations between rightsholders and online music platforms — some of which played out in public or even resulted in content being unavailable online.
Just this week, around the time YouTube temporarily took down music by SESAC songwriters, the digital rights licensing collective Merlin informed its member labels that TikTok “walked away” from talks to renew its license agreement and planned to deal with labels individually. This letter Merlin sent to its members says TikTok’s goal is “fragmenting the Merlin membership, in order, we believe, to minimize their pay out.” 

In one way, this is an old story. Most online platforms have so much market share that it’s hard for rightsholders to negotiate good deals: There’s just one TikTok, just like there’s just one Facebook and just one YouTube. But there are thousands of labels. Since smaller labels need giant platforms more than those platforms need labels, they need to bulk up, in order to balance market share against market share. For indie labels, that means either making a distribution deal with a major or joining Merlin, which negotiates on behalf of its members. (This same idea has fueled a merger mania throughout the media business, as movie studios and book publishers merge to better deal with Netflix or Amazon.) Sometimes, though, platforms push back. 

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In another way, this is an old story with a new twist. TikTok has suggested that part of the reason it wants to change its deal structure is that it’s concerned about fraud, specifically the alleged delivery of recordings and remixes by labels that do not own the rights to them or assert ownership incorrectly — a problem that sources say comes disproportionately from a few companies. This seems like a reasonable concern, and it’s one that’s widely shared, although the problem is hardly unique to Merlin. Plus, it should be possible to exclude a small number of bad actors from a new Merlin deal, and it’s hard to imagine that dealing with indies directly wouldn’t give TikTok a financial advantage.  

In yet another way, this is a whole new kind of negotiation, the likes of which the music business hasn’t seen since the early days of YouTube. These days, most online platforms need to play nice, or at least sort of nice, since negotiations that turn ugly in public tend to be distracting from other public policy priorities, and because today’s negotiating counterparty could become tomorrow’s business partner.

TikTok seems less concerned with these issues: It went without a Universal Music deal for about three months early this year and then didn’t renew its NMPA-blessed deal with independent publishers. Partly, that could be because it’s already facing an existential policy issue in the form of a ban in the U.S., or at least a forced sale to prevent that. It also seems to think that music doesn’t drive as much value — which could be why it’s shutting down its nascent TikTok Music subscription service. Whether or not the company is right, its attitude toward rightsholders can be very different.  

TikTok is also developing a reputation, fairly or not, for being less sentimental about the culture business than other platforms. For years, most online platforms have made the case that rightsholders are better off with the deals they’re offering, because of the exposure they offer — think YouTube or Spotify. TikTok clearly has significant promotional value, but it tends to act more aggressively. Or maybe its other reputational issues are so significant that pissing off music rightsholders just isn’t as big a deal.

That could change — TikTok’s Merlin strategy has indie labels rattled because it could splinter the rights group. If the platform’s gambit works, other companies could follow and Merlin could end up in a weaker position. The bigger indies would be fine. Others might look for leverage from the major labels’ indie distribution companies, like The Orchard (Sony Music) and Virgin (UMG), which would further undermine Merlin. This would damage the whole indie ecosystem — especially the small labels run by creative founders who don’t have the infrastructure to negotiate as smartly as Merlin. 

There’s also a chance that this won’t be as easy as TikTok thinks. Going around Merlin could save it money, but if it’s so simple you wonder why no other platform has tried it. One reason is that Merlin deals cover a wide range of labels and content, some of which could be hard to get otherwise. Another is that it’s easier to do one negotiation than hundreds. Assuming, of course, that TikTok is serious about negotiating, as opposed to simply sending a letter with deal terms that it expects rigthsholders to accept.  


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