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.”

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.