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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.
Independent music trade bodies have hit out at TikTok for boycotting collective license talks with Merlin by seeking to strike direct deals with its indie label members, accusing the platform of trying to divide the sector and “drive down the value” of music.
Licensing talks between TikTok and Merlin, which negotiates digital licenses for a coalition of more than 30,000 independent labels and music companies, representing 15% of the global recorded music market, abruptly ended late last month when “TikTok walked away before negotiations even began,” according to a letter Merlin sent to its members on Friday (Sept. 27).
The London-headquartered indie rights organization, which counts the labels 4AD, Domino, Matador, Subpop, Partisan, Warp, XL Recordings and Secretly Group among its members, said that TikTok told them that it would not be renewing its license deal, due to expire Oct. 31, and was instead looking to licence its members directly.
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A spokesperson for TikTok confirmed Monday (Oct. 1) that it was “committed to entering into direct deals with Merlin members in order to keep their music on TikTok.”
One of the reasons TikTok has given for not renegotiating its deal with Merlin is its concerns over alleged streaming fraud, which a TikTok spokesperson told Billboard specifically relates to a handful of Merlin members delivering songs or remixes of songs that they don’t own the rights to.
Addressing those allegations, Merlin told members it has worked “productively and collaboratively with TikTok” on streaming manipulation and fraudulent content “and until now, no concerns have been raised.”
Executives and trade bodies from across the independent music sector have also called into question TikTok’s reasoning for not renewing its deal with Merlin, while also slamming its attempts to boycott collective licensing with the company.
Brussels-based independent labels trade body IMPALA, which represents over 6,000 indie music companies in Europe and has previously criticized TikTok for the low returns it pays to rightsholders, said it strongly opposed TikTok’s attempts to boycott Merlin.
“Given the timing, it seems clear that TikTok’s real intention is to fragment the sector and drive down the value of independent music, rather than deal with streaming manipulation,” said Mark Kitcatt, chair of IMPALA’s streaming group, in a statement on Thursday (Oct. 3).
“Record labels have entrusted their rights to Merlin to negotiate on their behalf and by TikTok going directly to rights holders they are disrespecting the licensing agreements that are in place,” added Dan Waite, chair of IMPALA’s digital committee. “Like a supermarket chain negotiating directly with individual farmers for the price of their milk, it’s difficult to see how this can work out in the farmers’ favour.”
Referencing TikTok’s cited concerns around streaming manipulation, IMPALA’s executive chair Helen Smith questioned how seeking direct deals with Merlin members would better address the issue than renewing a collective license. “This feels like a smoke screen for boycotting Merlin given the history and the timing and the fact the whole industry is working hard on this important issue,” said Smith in a statement.
“TikTok’s claim that leaving Merlin would alleviate fraud is technically and effectively incorrect,” Gee Davy, interim CEO of the U.K.-based Association of Independent Music (AIM), tells Billboard. She claims that TikTok can already choose which music catalogs it uploads through the Merlin deal, and stresses it is by the industry working together “and TikTok re-engaging with Merlin that the industry will fight online fraud.”
“The resource required to close deals and manage a large number of independent music relationships, take down unlicensed music, and handle fraud separately across a number of participants would surely outweigh any gains,” says Davy. “And that’s aside from any reputational issues that arise from TikTok claiming to respect independent music while in practice showing that they don’t respect the licensing choices of independent music businesses.
“Many smaller labels and artists will be locked out of any direct licensing, which will sour relations as well as set back many years of work by Merlin, AIM and others in improving equitable access to the market and diversity of music available to consumers. We urge TikTok to speak to us and consider the bigger picture and; most of all, to recognise the inadvertent damage their actions have caused and return to discussions with Merlin.”
Those sentiments were echoed by Dr. Richard Burgess, president of the American Association of Independent Music (A2IM), who earlier this week told Billboard: “TikTok’s refusal to negotiate a deal with Merlin isn’t just a setback — it’s a threat to the whole music ecosystem.” Burgess said the dispute “isn’t just about Merlin; it’s about properly recognizing the value of artists and their music.”
The Brussels-based International Music Publishers Forum (IMPF) has also urged TikTok to reengage and strike a licensing agreement with Merlin, calling its attempts to “circumnavigate” collective licensing “a thinly veiled attempt to divide independent labels and drive down the price of music.”
“Merlin’s members have entrusted their rights to the organisation in order to uphold transparency, efficiency and fair remuneration. That must be respected,” said IMPF in a statement.
Merlin is the third music organization this year, after Universal Music Group (UMG) and the National Music Publishers’ Association (NMPA), to express challenges in renewing music licenses with TikTok. In February, UMG’s failure to reach a deal with TikTok led to the removal of its entire catalog of hits from TikTok for about three months.
In April, after publicly supporting UMG’s position against TikTok, the NMPA allowed its TikTok license, which was used by a number of indie publishers, to lapse as well. It has not been renewed. A spokesperson for TikTok says that many of the indie publishers have now established their own direct licenses with the short-form app.
Unless a swift resolution can be found between TikTok and Merlin — or Merlin’s label members choose to negotiate individual license deals with the ByteDance-owned platform — hit songs from artists like Nirvana, Phoebe Bridgers, Diplo, The Lumineers, Mac Demarco, Madlib, Mitski, Thundercat, Wet Leg and Coolio could start to be removed from TikTok on Nov. 1.
Last year, TikTok attempted to answer a seemingly simple question: What would TikTok be without music?
In February 2023, the company ran tests in Australia limiting the amount of licensed music some users encountered on the app. TikTok never revealed the results of those tests to the public, but some Australians who had their music libraries limited took to Twitter (now X) to complain. “wtf is up with tiktok removing like half the sounds??? like i swear ive seen SO many tiktoks where the sound has been removed,” tweeted one user.
The evidence is only anecdotal, but these tweets suggest that having limited access to licensed music did have at least some impact on the user experience in Australia.
Since its inception, the value of music has been an existential question for TikTok. This comes as no surprise; the company started out as the lipsyncing app Musical.ly, and in its current form, it is one of the most effective music discovery tools in the world. But since the modern-day TikTok launched as a general social media app — one that still features lots of music — the company has struggled to figure out how big a role music should play in their business — and how much they should have to pay for it.
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In the last year or so, TikTok has fought a prolonged battle against Universal Music Group over music licensing rates, AI, and safety concerns, leading to UMG’s three-month boycott of the platform; downsized parts of its music team; shut down the development of TikTok Music, its nascent music streaming app; and, last week, “walked away” from Merlin’s attempts to negotiate a renewed collective license for the 30,000 indie labels and distributors it represents. Instead, citing issues around fraudulent content, TikTok is only pursuing direct deals with Merlin’s member labels.
The UMG feud in particular seemed to represent a major turning point in TikTok’s perception of the value of music. The stalemate, which lasted from February to May, essentially took the small experiments done in Australia and brought them to a global stage with the world’s single largest catalog. Everyone from stars like Taylor Swift, Billie Eilish, Drake and the Weeknd, down to small artists signed to labels using UMG distributor Virgin, were removed from the platform overnight. If any event would have proved that music had negotiating power over TikTok, it would’ve been this one — but the impact was much more limited than the music biz would have hoped.
From talking to TikTok users during the UMG feud, many felt that the app experience was largely the same. Rarely, if ever, would anyone find a video on their “For You Page” with muted UMG audio. Whatever unknowable algorithm controls that feed simply adjusted to serve videos with still-available songs instead, seamlessly. The only time a user would notice the difference is if they were making a video themselves and realized they couldn’t find songs from a UMG-affiliated artist.
Plus, UMG artists big and small proved that they still wanted to make content for the app, even though doing so diminished the pressure UMG could put on TikTok to improve their compensation. Some UMG artists played their songs live instead of using the UMG-owned recording. Others would use unauthorized remixes (including sped up, slowed down and mashed up versions) of their UMG-controlled songs. Some ended up striking direct deals with the platform or finding contractual workarounds to skirt the ban, and the final nail in the coffin seemingly came when Taylor Swift’s catalog suddenly came back to TikTok on April 11 —– complete with a special campaign around her then-upcoming album, The Tortured Poets Department.
When the two companies finally reached a deal three weeks later, just before UMG’s next earnings call, UMG chairman/CEO Lucian Grainge spoke triumphantly about the new TikTok deal. “This new chapter in our relationship with TikTok focuses on the value of music, the primacy of human artistry and the welfare of the creative community,” Grainge said. It’s quite possible that, with the new deal, UMG extracted many of the concessions that it wanted from TikTok.
Still, overall, the effects of the three-month standoff were pretty limited: many TikTok users didn’t notice a change, while UMG’s stream count went unaffected. The key takeaway is that artists, desperate for promotion, would still make musical content for the app for free, even if it infringed on their own unlicensed copyrights. It became a race to the bottom, like so many other things in music.
So it comes as little surprise that when Merlin’s TikTok license came up for renegotiation, TikTok played hardball —– or rather, TikTok just refused to play ball with Merlin altogether.
Instead, TikTok wants to license its 30,000 indie record label members individually — a move which Merlin sees as an attempt to “fractionalize” members to “minimize” licensing costs, according to a letter Merlin sent to its labels last week.
The whole idea of Merlin — which says it represents 15% of music repertoire globally — is for these small, individual labels to be able to band together and negotiate deal terms with digital partners that are at least in the same neighborhood as their bigger major label brethren. Antitrust laws prevent Merlin from telling its members what to do, meaning TikTok is technically free to negotiate individually and bypass their coalition. Even if Merlin could pull such a move to band together its membership against TikTok, it’s hard to imagine a boycott of indie music going any better than UMG’s.
Optically, it’s one thing for TikTok to stand up to the biggest music company in the world and argue that UMG had put their own greed above the interests of their artists and songwriters” in an attempt to lower the rates it had to pay the label. It’s another entirely for the app, which has over a billion users, to lowball the little guys.
Overshadowing all of this, of course, is the fact that TikTok’s corporate parent Bytedance is in a court battle with the U.S. government that, if it loses, could mean it would be forced to sell its U.S. business. In preparation, TikTok is likely cutting costs wherever it can. Given how tough it is for the music industry to walk away from TikTok, it’s unfortunately one of the easiest places to start.
So what is the value of music to TikTok? It’s been a moving target throughout the company’s history. In light of recent events, however, I’ll let you be the judge.
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.
At the end of 2022, pop singer-songwriter Mark Ambor felt lost in his music career. Despite recently signing a record deal and releasing his debut EP, Hello World, something didn’t feel right.
“I fell into this routine of teasing a song, [and] if it did well, putting it out, but I was feeling like I wasn’t saying anything I really mean,” he remembers. “I wasn’t digging deep or singing about things important to me.”
To clear his mind, Ambor, 26, embarked on a months-long international backpacking trip with his then-girlfriend — and returned feeling grounded with a whole new wave of inspiration for songs. He quickly wrote the whimsical, acoustic “Good to Be” and now refers to it as the first time he was musically “genuine and fully expressing myself.”
Just a few months later, he struck gold: While playing guitar in his bedroom, he wrote the lyrics, “You and me belong together/Like cold iced tea and warmer weather,” which would become the instantly catchy hook to the cozy, uplifting “Belong Together,” his ultimate breakthrough and first Billboard Hot 100 hit.
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Meredith Jenks
Ambor grew up with a musical background in Pleasantville, N.Y., playing the piano from a young age at his parents’ request. Though the skill took a backseat in high school, he rekindled his love for the instrument as he approached graduation, trading the classical pieces he previously learned for modern-day pop songs. He proceeded to pen his first song that summer, as he grappled with the emotions of having to leave his small hometown to attend Fairfield University in Connecticut. “I didn’t want to leave home,” he says, “and I tried to write a song to get those feelings out.”
He then returned to work that night as a barback and casually sent the song to his parents in a group chat. “My mom was like, ‘Dad and I love this song. Who’s the artist?’ ” he recalls with a laugh. “I was like, ‘Mom, what do you mean?’ It’s me!”
Ambor self-released a few songs while obtaining a marketing degree in college, and upon his graduation in 2020, decided to take six months to completely immerse himself in chasing his dreams as a musician before considering a different job. “COVID happened after I said that,” he recalls. “I got to spend time working on music at home.”
Thanks to a suggestion from a friend, he joined TikTok later that year. He steadily began to grow a following with his cool guy next door vibe: People gravitated not only toward his big smile and curly brown hair, but to his voice and disarming demeanor as well. He soon began posting covers — including breathtaking renditions of Coldplay’s “Yellow” and Billie Eilish’s “Happier Than Ever” — as well as a few originals, and ultimately caught the attention of then-independent manager Kyle Thomson, who admits he’s a “sucker” for a great voice over a piano melody and asked Ambor to send a few demos.
“It was so early on in both of our careers,” says Thomson. “I was excited to dive into something that I felt was going to be a fun project to build.” By the end of 2020, Ambor had signed a management deal with Thomson.
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Like Ambor, Thomson knew that some of his artist’s early work wasn’t playing to the singer-songwriter’s strengths. “At the beginning, he told me he wanted to make early 2000s festival, opera-rock music, like Passion Pit or Grouplove,” he says. “I was like, ‘That doesn’t make sense for what I think your qualities are. Why would you take your natural, raspy voice and distort it with synths?’ What he meant [initially] was that he wanted to make music that made him feel the same way that those bands made people feel.”
But after hearing “Belong Together” for the first time, Thomson knew that Ambor had succeeded in his mission. On the heels of his release of “Good to Be” in October 2023 — and its growing popularity on a global scale — Ambor began to tease the forthcoming new track in late December. And following a few months of building hype on TikTok, “Belong Together” arrived on streaming services on Feb. 16.
Ambor continued to stoke the fire well after its release, posting many videos on the platform of him walking the streets of major European cities while on tour and singing its dialed-up final chorus, several of which have compiled more than 10 million views each. Per Thomson, user-generated content and influencer marketing was crucial in making “Belong Together” “as big as humanly possible.”
By May 11, the single debuted at No. 87 on the Hot 100. It later reached a No. 74 high — and has spent 21 weeks and counting on the ranking. It has also reached Nos. 24 and 20 peaks on the Billboard Global Excl. U.S. and Pop Airplay charts, respectively. “Belong Together” has earned 141.6 million official on-demand U.S. streams and 610.2 million official on-demand global streams through Sept. 26, according to Luminate.
“It has been really surreal to write something that is so heartfelt and authentic to myself and then feel it resonate around the world the way it has,” Ambor reflects. “The way a song can mean something to a fan that’s different than my own experience, but it’s their own story that they’ve attached to a song of mine … that part blows my mind.”
Meredith Jenks
In August, Ambor’s debut album, Rockwood, arrived through Hundred Days/Virgin Music Group, despite some hesitation from the rest of his team to put out a full project too quickly. (Ambor notes the success of “Belong Together” helped in convincing them otherwise.) He split with the label soon after its release, and while he doesn’t divulge much on specifics, he emphasizes trusting his gut while continuing to grow his career.
“I think people sometimes get too caught in the industry of it all,” he says. “Maybe I’ll sign to a major; maybe I’ll stay independent forever. What really matters is putting out good music and meeting and talking to the fans.”
“He has the best work ethic of anyone I’ve ever met,” adds Thomson. “Mark thinks that he can be Taylor Swift, and I’m not going to stop him.”
A version of this story appears in the Oct. 5, 2024, issue of Billboard.
Merlin, which negotiates digital licenses for a coalition of more than 30,000 independent labels around the world, told its members in a letter on Friday (Sept. 27) that TikTok “walked away” from talks to renew their TikTok license “before negotiations even began.”
“[TikTok] informed us that they do not want to renew our deal,” the letter, obtained by Billboard, states. “They informed us that… they intend to license some of our members directly.” The current Merlin-TikTok license is set to expire on Oct. 31.
“Their approach [to pursue direct deals with Merlin members] suggests that [TikTok] believe[s] their objectives can be better served by fragmenting the Merlin membership, in order, we believe, to minimize their pay out,” states the letter. “As you know, Merlin was founded to stand up for and champion its members. We will not support an approach that devalues our community.”
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A TikTok spokesperson says that “TikTok would like to offer all of the world’s music to our users. We are committed to working with the independent sector as well as the major labels and publishers. We know that our community of over a billion music fans value the diversity and richness that independent music brings to our platform. We are committed to entering into direct deals with Merlin members in order to keep their music on TikTok.”
Founded in 2008, Merlin represents 15% of the global recorded music market, and it uses that collective market power to negotiate with digital partners on behalf of its members on a similar footing as the bigger major labels. The end of its license with TikTok would mean that top songs from artists like Coolio, Diplo, Faye Webster, J Dilla, The Lumineers, Mac Demarco, Madlib, Mitski, Nirvana, Phoebe Bridgers, Thundercat, Wet Leg and more will leave the platform after Halloween, unless their respective labels are able to reach agreements with TikTok. Each label individually would have to agree to terms with the platform, negotiating with a much smaller market footprint than they would have collectively.
Merlin is the third music organization this year, after Universal Music Group and National Music Publishers’ Association (NMPA), to express challenges in renewing music licenses with TikTok. In February, UMG’s failure to reach a deal with TikTok led to the removal of its entire catalog of hits from TikTok for about three months. In April, after publicly supporting UMG’s position against TikTok, the NMPA allowed its TikTok license, which was used by a number of indie publishers, to lapse as well. It has not been renewed.
“We believe the most likely reason that TikTok did this is that TikTok does not want to pay a fair rate for the music that powers their platform,” Merlin’s letter to members continues. “If this is right, then TikTok does not value independent music, the independent labels and distributors who support that music, nor the diverse artists who create it. They are unlike every other partner that Merlin works with.”
Along with negotiating digital deals for indie labels on TikTok, Merlin also licenses members’ catalogs to 40 services around the world, including platforms like YouTube, Meta, Spotify, Apple Music, Amazon Music, Tidal, SoundCloud, Deezer and more.
Separately, Billboard obtained an email TikTok sent out to some Merlin members, stating that the short-form video app “decided not to renew [its] license agreements with Merlin” and that TikTok “may be able to do direct deals” with the labels, provided that they agree to sign a non-disclosure agreement (NDA). “The purpose of the NDA is to enable us to discuss direct licensing agreements with you.” The deadline to sign and return the NDA is Oct. 4. A source familiar with TikTok said, however, that any Merlin label that wishes to stay on TikTok after Oct. 31 can review and sign the TikTok and CapCut agreements anytime before Oct. 25.
Merlin told its members that it is doing “all [it] can to re-engage with TikTok… we have already made it clear to them that we are ready to hold an actual negotiation and address any concerns they may have.”
While Merlin believes TikTok’s move is an attempt to keep the price tag for indie music lower than it would like, the organization’s letter to members also says that TikTok has “suggested” they are walking away “because of concerns about ‘fraud.’” “As we have told them on numerous occasions, we are incredibly proactive on this issue,” the letter states.
“TikTok’s refusal to negotiate a deal with Merlin isn’t just a setback — it’s a threat to the whole music ecosystem,” Dr. Richard Burgess, president of the American Association of Independent Music (A2IM), says of the situation. “This isn’t just about Merlin; it’s about properly recognizing the value of artists and their music.”
Merlin declined Billboard’s request for comment. In an interview with Billboard published last week, Merlin CEO Jeremy Sirota discussed his approach to renewing partnerships with platforms such as Meta and YouTube, with which Merlin has struck new deals of late. “We don’t think of it as, ‘Let’s come back and kick the tires every few years,’” Sirota said. “We want to help shape their thinking about music and their understanding of what independents need at an operational level. We want to do the same thing with our partners to create this continual feedback loop and conversation.”
Merlin’s membership includes, but is not limited to, independent labels like 4AD, Brain Feeder, Captured Tracks, Domino, Dualtone, Empire, Higher Ground, Matador, Ninja Tune, Secretly Group, Stones Throw, Subpop, Tommy Boy, XL and thousands more.
Read Merlin’s letter to members below in full:
Dear Merlin Member,
On August 5th, we informed you that we expected a difficult negotiation with TikTok.
This past Wednesday, with no warning, TikTok walked away before negotiations even began. They informed us that (1) they do not want to renew our deal, which expires on October 31st, and (2) they intend to license some of our members directly. To be even more clear, unfortunately, as of now, there will not be a Merlin-TikTok deal after October 31st.
We believe the most likely reason that TikTok did this is that TikTok does not want to pay a fair rate for the music that powers their platform. If this is right, then TikTok does not value independent music, the independent labels and distributors who support that music, nor the diverse artists who create it. They are unlike every other partner that Merlin works with.
TikTok pays substantially less for your music than other services, apparently relying on the perception that artists cannot afford to have their music unavailable on the platform. We made a good faith proposal to narrow this gap, but rather than negotiate, TikTok chose to simply walk away.
Given that TikTok refused to negotiate with us, our view is that they must see the obligation to pay fair royalties as a nuisance. They must view Merlin – with its mission to protect and maximize the value of our members’ music – as too strong a negotiating partner for their liking. Their approach suggests that they believe their objectives can be better served by fragmenting the Merlin membership, in order, we believe, to minimize their pay out.
TikTok has asked us for an “orderly transition” to do direct deals with those members they deem worthy. As you know, Merlin was founded to stand up for and champion its members. We will not support an approach that devalues our community.
The Merlin team remains dedicated to forging meaningful relationships between our members and partners, as well as driving value into every partnership. This includes dedicated teams to answer member inquiries across every aspect of our partnerships, operational support, best practices guides, partner-led and Merlin-led webinars, consolidated pitch forms, and so much more.
We are doing all we can to re-engage with TikTok to secure a renewal agreement for our members. We have already made it clear to them that we are ready to hold an actual negotiation and address any concerns they may have. TikTok has also suggested that they are walking away because of concerns about “fraud,” but as we have told them on numerous occasions, we are incredibly pro-active on this issue.
We recognized early on, and communicated with TikTok, the concerning growth and impact of stream manipulation and fraudulent content both on TikTok and across the marketplace. We have worked productively and collaboratively with TikTok on this issue, and until now, no concerns have been raised about the approach Merlin is taking. We have implemented measures to address illegitimate activity and content; automated systems to detect suspicious activity; and a dedicated team to address issues and impose sanctions, including ultimately, termination of membership for bad actors.
Members must, as ever, make their own decisions on how to deal with TikTok. For our part, we will never stop fighting for the value that our members bring, regardless of how this situation resolves itself.
We will follow-up by separate email with whatever answers we might have on your operational questions.
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When Slipknot first contacted Cedar Ridge Distillery, which is located 120 miles from the band’s hometown of Des Moines, Iowa, management was not interested in an alternative metal whiskey brand inspired by scary clowns. Until one of the owners forwarded the Slipknot email to employees. “Oh, my God, Slipknot — are you kidding me?” came the overwhelming response. “We have to do this.”
The result, Slipknot No. 9 Reserve Whiskey, which debuted in 2019, represents the shattering of a “glass ceiling” in the heavy metal business, according to Cory Brennan, Slipknot’s manager. Metal-branded products were once taboo; today, they’re no-brainers. “For so long, the gatekeepers were scared of anything aggressive and scared of metal and scared of their audiences. Over the past 15 years, that’s really changed,” Brennan says. “More and more people are open to the genre. They’re kids, adults. Some are grandparents at this point. And they’re loyal. They’re not going away.”
Artists from all genres rely financially on fan bases who buy product. Metal audiences tend to be loyal for years, even decades — and that loyalty translates into revenue for long-running legacy acts. Iron Maiden built a worldwide branded-apparel business out of its logo and skeletal Eddie the Head mascot.
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“Pop comes and goes. Metal stays consistent,” says Barry Drinkwater, executive chairman of Global Merchandising Services, which works with Iron Maiden, Guns N’ Roses and others.
The revenue proportions in the metal world are different from those of pop or hip-hop. Marketing and selling albums remain important for the bands’ labels. Brian Slagel, owner and chairman/CEO of Metal Blade Records, home of Mercyful Fate, Sacred Reich and many others, says the 42-year-old indie label makes 25% to 30% of its revenue from vinyl album and CD sales, and the rest from streaming, although only the genre’s biggest stars are racking up substantial royalties, such as Metallica and Black Sabbath, which have both crossed the 1 billion stream threshold.
Most metal acts, however, rely on touring and merch. “Merchandise on the road is probably the No. 1 source of our income,” says Keith Wampler, frontman for The Convalescence, a symphonic horror death metal band from Toledo, Ohio.
Drinkwater adds, “Eighty percent of it is a black T-shirt.” Metal merch sales boomed during the coronavirus pandemic, when fans stuck at home turned to online shopping. In July 2020, August Burns Red guitarist Brent Rambler found himself shipping hundreds of packages from the basement of his house to fans who were spending money on merch instead of live shows. “A lot of tape and scissors,” he recalls. The group soon hired a fulfillment company to help with the orders and built a thriving online store. “It has fully replaced the income almost of doing a full tour,” Rambler adds. “We say it’s the silver lining of the pandemic.”
The strength of merch sales has since helped bands weather the post-pandemic inflation that has hiked up the prices of buses, crew, hotels and gas and cut into the profit margins of groups with smaller fan bases.
Meanwhile, the genre’s marquee acts are thriving. Metallica sold 1.2 million tickets last year, grossing $125.8 million, according to Billboard Boxscore. And Cannibal Corpse drummer Paul Mazurkiewicz says, “We’re doing the best we’ve ever done. A lot of bands talk about the tough time touring and the costs and all that, but we don’t see any of that.”
New headliners are also emerging, says Hatebreed frontman Jamey Jasta, who bought the rights to the dormant Milwaukee Metal Festival and rebooted it in 2023. Knocked Loose, Lorna Shore and Slaughter To Prevail are among the bands that have drawn massive live crowds despite repertoires with “almost no melody,” Jasta says. “We had [all three] headlining on a Sunday. It was the biggest day and outdrew [more established bands] Lamb of God and Machine Head.”
And while metal acts have yet to master TikTok the way pop star influencers have, their fans’ social media posts often heighten their visibility and drive discovery. Slagel calls TikTok “vitally important,” and says metal bands that distance themselves from the app wind up dominating it anyway. “I went to see Cattle Decapitation and Immolation in Dallas. Both bands were telling me there were a lot of younger fans there that they haven’t really seen [before]. I said, ‘Well, it’s TikTok.’ And they said, ‘We’re not on TikTok!’ ” he recalls. “But your fans are on there,” he told them, “and they’re hashtagging Cattle Decapitation and posting videos.”
The key to long-term success, say veteran metal stars, is to keep touring and recording, as well as taking control of their masters. Testament, founded in 1983, made a deal with indie Megaforce Records in the mid-’90s to license its recordings rather than sign over the rights, and is awaiting the reversion of its earlier Atlantic Records masters after 35 years, according to U.S. copyright law. “The label’s like, ‘Have you ever looked at your numbers?’ We have close to 3 million listeners a month on Spotify,” frontman Chuck Billy says. “I was like, ‘Holy smokes!’ All the publishing rights, everything goes to us. We rode the storm out and stayed together. We’re still out there touring pushing the music — now we own it.”
The multigenerational consumer demand for metal and the avid loyalty of its fans may lead to multi-million-dollar catalog sales. Now that Mötley Crüe and KISS have sold their publishing catalogs for hundreds of millions of dollars, heavier bands are optimistic. Publishing companies have been “knocking on our door,” Billy says.
“I hear Judas Priest and Van Halen on car commercials, I hear bands that we grew up with on commercials,” he adds. “Ten or 15 years from now, it might be Testament.”
News that Bytedance will shut down its 18-month old TikTok Music on-demand music streaming service might have come as a surprise to some people. After all, TikTok has over 1 billion monthly active users globally and singlehandedly redefined music discovery by turning generation of smartphone users onto music-based, short-form videos.
But TikTok Music’s demise was entirely predictable. Building a sustainable on-demand music streaming service is incredibly challenging. The digital music graveyard is littered with streaming products that didn’t last — remember Rdio, Boinc, Guvera, Turntable.fm or SpiralFrog? Not even a well-funded platform from a corporate giant is guaranteed of success. Sony’s Music Unlimited didn’t last. Nor did Microsoft’s Zune. Xiami, founded by Chinese e-commerce giant Alibaba, shut down in 2021 after 12 years.
Bytedance’s uphill road was made more difficult when it took on a different role with TikTok Music. TikTok was an insurgent that built itself without the typical constraints facing typical streaming services. The app created a new use case for music in the same way the download succeeded the CD and streaming succeeded the download. TikTok Music, on the other hand, was constrained by the licensing terms that govern on-demand services.
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As a result of those rules, Bytedance built something more like Spotify than TikTok because it didn’t have any other choice, says MIDiA Research’s Mark Mulligan. “TikTok Music had massive potential to be these so many things that didn’t look anything like any other [digital service provider],” he says. “But they still ended up having to make something that looked pretty much like any other streaming service.”
That TikTok Music resembled every other music streaming service was a problem, Mulligan argues, not a solution for a new market entrant. On-demand music has become a well-functioning utility like water service, he explains, but one that doesn’t build communities, drive fandom or create conversion — things TikTok does well and TikTok Music couldn’t. “We all really value the water that comes out of our taps, but we rarely go down to the local bar and talk to our friends about how great the water is that comes from taps,” says Mulligan.
These aren’t just any utility companies TikTok Music has been competing against. Market leader Spotify, with its $76 billion market capitalization, is far smaller than the next three companies, Apple, Google and Amazon. These four companies, and even smaller ones like them, have spent years pouring resources into building products and features that keep people listening to music, podcasts and, in the case of Spotify, audiobooks.
TikTok is great at creating engagement, too, but getting people to listen to full songs is different than feeding them a never-ending series of 15-second video clips, says Vickie Nauman, founder of CrossBorderWorks, a music tech and consulting and advisory firm. “You can’t necessarily translate that to something else.”
Things might be different if TikTok Music could differentiate itself on catalog by offering music not available on other music platforms. That’s how it works with on-demand video streaming. But global music services have, more or less, the same catalogs. Offering the world’s music has long been part of the music subscription service’s value proposition. So, music streaming services instead compete against one another on their user experiences.
On-demand services “had to make [the user experience] so elegant, so intuitive, and really, really customize it to consumers,” Nauman explains. In her experience, people underestimate the difficulty of creating a great product and executing the technology that underpins it. “It’s incredibly challenging,” she says. “Not only the user experience,” she continues, but the technology required to manage many tens of millions of tracks. “I think a lot of companies just really misperceive it.”
Changing consumer habits was always going to be a problem, too. It would be presumptuous to think anybody with a TikTok app would become a TikTok Music subscriber. Not every iPhone owner subscribes to Apple Music even though Apple offers a free trial to new iPhone owners and bundles the music service into a money-saving package, Apple One. Even though Alphabet owns both the Android operating system and YouTube, not every Android Phone owner subscribes to YouTube Music.
“To some extent, I’m not surprised” by TikTok Music’s failure, says MusicWatch principal Russ Crupnick. When MusicWatch surveyed American TikTok users about their interest in a standalone TikTok streaming service, the reaction was “surprisingly low” and “very lukewarm,” he says. (TikTok Music never launched in the U.S.) “Getting most people to switch [subscription services] at this point is a bit of a challenge. You’re more likely to get people to use multiple services.”
In the U.S., self-pay subscribers — not including free trials — have an overage of 2.3 music subscription services, according to MusicWatch. That includes Amazon Prime, which online shoppers buy mainly for free shipping, as well as satellite radio service SiriusXM. Asking people paying for multiple services to pay for one more music subscription plan is a tall order for a newcomer like TikTok Music. What’s more, MusicWatch found that Spotify ranks behind only Amazon Prime in terms of subscriber passion. When the economy gets rough, Spotify users are relatively unlikely to cancel their plans.
Zoom out and the demise of TikTok Music reveals something else about the music streaming market. In 2024, the number of global platforms may have reached a steady state and new entrants are unlikely to appear (and, like TikTok Music, any attempts will be unsuccessful). Experts who spoke with Billboard don’t foresee there being another company with both the funding and the stomach to take on the demands of licensing and administering rights for a huge amount of music.
“We’re at a fork in the road where all of these broad catalog licenses are kind of exhausted,” says Nauman. Gaming companies have the money but don’t need to license entire catalogs, she adds. Fitness companies that had licensed large catalogs now “want simpler solutions.”
If new entrants are going to find success, says Mulligan, it could be in “regional hubs” in which streaming services can license a smaller amount of local music and focus on markets where Western repertoire is less important. In China, for example, a market dominated by local music licensed by local rights owners, Tencent Music Entertainment has 117 million subscribers and Cloud Music had 44.1 million at the end of 2023 (the last figure the company made available). But regional services are being threatened by the bigger global companies. In some populous markets such as India and the Philippines, dominant Western companies have pushed aside local players.
In the end, Bytedance doesn’t need TikTok Music to be an influential force in music. Mulligan thinks it’s possible that the “majority” of music activity — not revenue — will happen on TikTok within three to five years. Younger people want to create, not just consume, he says, and TikTok could become a self-contained ecosystem that captures more of its users’ time — at the expense of the kind of on-demand streaming business that Bytedance is now abandoning.
TikTok plans to end its subscription streaming service, TikTok Music, the company announced on Tuesday (Sept. 24). TikTok Music, which is currently available in Indonesia, Brazil, Australia, Singapore and Mexico, will wind down on Nov. 28.
The company will pivot to focus its efforts on the “Add to Music App,” which launched last November and allows users to save a track they discover on TikTok to their preferred streaming service with a few clicks.
“Our Add to Music App feature has already enabled hundreds of millions of track saves to playlists on partner music streaming services,” Ole Obermann, TikTok’s global head of music business development, said in a statement. “We will be closing TikTok Music at the end of November in order to focus on our goal of furthering TikTok’s role in driving even greater music listening and value on music streaming services, for the benefit of artists, songwriters and the industry.”
To the extent that the “Add to Music App” sends more TikTok users to streaming services to listen to songs they found first via short-form video, the music business views this as a win. The industry believes TikTok doesn’t pay enough when music is consumed on the platform, leading to a headline-grabbing stand-off with Universal Music Group earlier this year. Music rights holders are happier, however, with the rates at Spotify, Apple Music and Amazon Music.
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TikTok launched TikTok Music — Obermann described it as “a new kind of service that combines the power of music discovery on TikTok with a best-in-class streaming service” — in Indonesia and Brazil in July 2023. It expanded to Australia, Singapore, and Mexico in October of that year.
“TikTok Music will make it easy for people to save, download and share their favorite viral tracks from TikTok,” Obermann said in a statement at the time. “We are excited about the opportunities TikTok Music presents for both music fans and artists, and the great potential it has for driving significant value to the music industry.”
The company rolled out the “Add to Music App” soon after, making it available to U.S. and U.K. users in November. The language Obermann used to describe this new feature wasn’t all that different from the way he talked about TikTok Music.
The “Add to Music App” represents “a direct link between discovery on TikTok and consumption on a music streaming service,” Obermann said, “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.”
While TikTok has often seemed like a competitor to streaming services — especially when it comes to cornering the market on music discovery — the “Add to Music App” announcement stressed that they were all happy partners in a listener’s journey.
“We want to create less work to get to the audio you love,” Sten Garmark, Spotify’s global head of consumer experience, said in a statement last year. “That means being everywhere our users are and creating seamless ways to save songs to Spotify to enjoy when and how they choose to listen.”
In February, TikTok expanded access to the Add to Music app, making it available in 163 countries.