Following value gap concerns raised earlier this year, Impala opposes TikTok's attempt to boycott Merlin, flags importance of collective deals for diversity and consumer choice

02 October 2024 - Press release

 

IMPALA’s members have raised the alarm about TikTok who is trying toboycott renewing a collective deal with Merlin, the licensing agency for independent music companies. This is a concern as Merlin plays a crucial role collaborating with services, providing efficiencies, diversity and consumer choice. It also delivers access to market and value for members as well as economies of scale for licensees by assembling a multitude of right owners in a collective one-stop shop. IMPALA already raised issues about the value gap with TikTok in April and this latest development compounds these concerns.

Considering the history, it seems clear that TikTok's aim with this approach is to pay less for music, with many labels concerned they would be excluded. On top, labels’ freedom to decide how they deal with their rights is being attacked, with TikTok seeking a boycott of Merlin. TikTok also loses out as it will not have access to the same diversity, something which it has already underlined as important. 

Dan Waite, chair of IMPALA's Digital committee, commented: “Labels should be free to decide, this is a question of principle and TikTok’s boycott should be called out. 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. 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.”

IMPALA issued a statement earlier this year about TikTok and the need to achieve proper value. This is a key part of IMPALA’s ten-step plan to make the most of streaming including with services like TikTok, dubbed “moment economy”.  Mark Kitcatt, chair of IMPALA’s streaming group, commented: “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. There is clearly a huge value gap already in terms of revenues paid for music. TikTok’s move underlines the power it has in the market. It will harm cooperation to end streaming fraud, increase friction and inefficiency and diminish choice for TikTok’s customers”.

In April TikTok responded to IMPALA’s value gap concerns publicly, noting “…we value the relationships and the licensing agreements we have with the independent community in Europe”. TikTok also referred to growing hits from a “range of genres and countries, from established starts to those just starting out.”

Dario Drastata, IMPALA Chair and Chair of RUNDA Adria added: ‘We believe giving labels the option to work under a collective deal is the best way for TikTok to achieve these aims and work with artists and genres from across Europe. We respect freedom of choice in entrepreneurship. The growth of the independent sector across all platforms is fundamental to provide fans and consumers with choice and adversity, exactly what TikTok stands for. The easiest way achieve that is through Merlin.” 

The question of manipulation has also been flagged by both Merlin and TikTok and indeed TikTok has gone to press on this. Helen Smith, IMPALA Executive Chair commented: “Dilution is of course an issue in every deal and that will continue. It’s hard to see how direct deals could address this better than a Merlin deal. Surely the issues are better addressed on a collective basis in a standardised way? 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.” 

IMPALA noted in April that it is vital to work together and explore ways to grow the value of the moment economy as a key part of the music ecosystem. This remains the sector’s preferred path. IMPALA also flags that the issues will resonate with regulators who have already raised concerns about the way TikTok is operating, not only in the EU but in other jurisdictions.