TikTok inks licensing deal with Merlin to use music from independent labels in videos and new Resso streaming service

Ingrid Lunden

TikTok, the fast-growing user-generated video app from China's ByteDance, has been building a new music streaming service to compete against the likes of Spotify, Apple Music and Amazon Music. And today it's announcing a deal that helps pave the way for a global launch of it. It has inked a licensing deal with Merlin, the global agency that represents tens of thousands of independent music labels and hundreds of thousands of artists, for music from those labels to be used legally on the TikTok platform anywhere that the app is available.

The news is significant because this is the first major music licensing deal announced by TikTok as part of its wider efforts in the music industry. Notably, it's not the first: I've confirmed TikTok has actually secured other major labels but has been restricted from going public on the details.

The Merlin deal is therefore a template of what TikTok is likely signing with others: it includes both its mainstay short-form videos -- where music plays a key role (the app, before it was acquired by ByteDance, was even called "Musically") -- as well as new music streaming services.

Specifically, a source close to TikTok has confirmed to TechCrunch that the licensing deal covers its upcoming music subscription service Resso.

Resso was long-rumoured and eventually spotted in the wild at the end of last year when ByteDance tested the app in India and Indonesia. ByteDance owns the Resso trademark, so it's a good bet that it will make its way to other markets soon. (Possibly with features that differentiate this later entrant from others in the market? Recall ByteDance acquired an AI-based music startup called Jukedeck last year.)

“Independent artists and labels are such a crucial part of music creation and consumption on TikTok," said Ole Obermann, global head of music for TikTok, in a statement. "We're excited to partner with Merlin to bring their family of labels to the TikTok community. The breadth and diversity of the catalogue presents our users with an even larger canvas from which to create, while giving independent artists the opportunity to connect with TikTok's diverse community."

Music is a fundamental part of the TikTok experience, and this deal covers everything that's there today -- videos created by TikTok users, sponsored videos created for marketing -- as well as whatever is coming up around the corner.

A music streaming app, which TikTok has reportedly been gearing up to launch for some time, is one way that the company could help generate revenue. Despite being one of the most popular apps of 2019, monetisation has largely eluded the company up to now.

One reason why monetising may happen is because of the lack of deals at the other end of the chain. As of December, TikTok reportedly had yet to sign any deals with the "majors" -- Sony Music, Warner Music and Universal Music. From what we understand, Merlin is the first big deal of its kind announced by the company, but others are already in place.

In any case, the company is ramping up its bigger music operation.

Obermann, who was hired away from Warner Music last year, in turn hired another former Warner colleague, Tracy Gardner, who now leads label licensing for the company. And just yesterday, the company opened an office in Los Angeles, the heart of the music industry.

The move to bring more licensed music usage to TikTok (and other ByteDance apps) is significant for other reasons, too.

On one hand, it's about labels trying to evolve with the times, collecting revenues wherever audiences happen to be, whether that is in short-form user-generated video, in advertising that runs alongside that or in a new music service capitalising on the new vogue for streamed media.

"This partnership with TikTok is very significant for us," said Jeremy Sirota, CEO, Merlin, in a statement. "We are seeing a new generation of music services and a new era of music-related consumption, much of it driven by the global demand for independent music. Merlin members are increasingly using TikTok for their marketing campaigns, and today’s partnership ensures that they and their artists can also build new and incremental revenue streams.”

Times are changing in the music industry. Sirota himself only joined Merlin earlier this month, after working on music efforts at Facebook for the last couple of years (and before that at Warner Music, like TikTok's two key executives).

On the other hand, the deal is significant also because it underscores how TikTok is increasingly working to legitimise itself in the wider tech and media marketplace.

While ByteDance's acquisition of TikTok continues to face regulatory scrutiny, the company has been working on ways to assert its independence from China's control, which has included many clarifications about where its content is hosted (not China! it says) and even a search for a new U.S.-based CEO. On another front, more licensing deals should also help the company with the many legal and PR issues that have been hanging over it concerning how it pays out when music is used in its popular app.

Updated with clarification that Obermann works for TikTok, not ByteDance, and the news that there are other music deals in place that have yet to be announced.