October 3rd | What's going on with TikTok & Merlin? Plus: Reservoir Media drama & Spotify price hikes

Hey everybody,

We are back yet again with your weekly roundup of music news. We’re going to dive into the latest on the Merlin / TikTok standoff, as well as Spotify ’s price hikes in Canada, and some bubbling drama at Reservoir Media Management, Inc. . 

After this newsletter we will return to a regular weekly schedule—for those who are new, we’ve been experimenting to see which day of the week inspires the best engagement amongst readers on LinkedIn. So far Friday is the favorite, but I’m feeling optimistic about Thursday!

Indie Insider is brought to you by Habitat Financial . The music industries only comprehensive financial management tool. Whether you’re looking for easy royalty processing or payment solutions, Habitat has you covered! Check out our pricing page to see just how affordable Habitat is (hint: we have a free plan).

Ok, now onto this weeks’ news.

TikTok licensing negotiations with Merlin collapse over concerns about fraud

TikTok has been staring down an October 31st expiration date for their deal with Merlin, the independent licensing body, and yet just this week they pulled out of negotiations leaving an estimated 15% of the world’s music in limbo on the platform. Why?

According to TikTok, it has everything to do with concerns about streaming fraud. The social media giant claims that content from a number of Merlin members—reading between the lines here they are most likely referring to some of Merlin’s distribution members like CD Baby , Amuse , etc—do not have sufficient quality control when it comes to copyright infringement. TikTok claims that the policing of manipulated copyrighted material on their end is too big of a burden, thus they are choosing to sign individual deals with Merlin members instead of a blanket deal.

Now, this could just be a convenient scapegoat. Breaking up the collective bargaining power of Merlin certainly provides TikTok with the edge in any individual negotiations. It’s possible that they walked away from licensing talks because they feel it’s in their best financial interest to deal with labels directly. That said, this announcement comes at a time where the issue of music-related fraud is being talked about more and more often. This month, the US charged a North Carolina man with the US’s first case of streaming fraud. We also had major changes to DSP payouts as a result, in-part, of streaming fraud.

For now, labels and artists should communicate with this distribution partners to find out if your music will be affected. Labels utilizing Merlin deals should review and sign the TikTok individual label deal by October 25th.

Spotify raises prices in Canada as a response to new streaming tax

Spotify notified its Canadian users that prices will increase across the board. The standard individual Spotify plan will now cost $12.69, while the family plan will increase to $20.99. Those are 15% and 24% increases respectively.

In an email to customers Spotify claimed that the price hike was being implemented in order to improve features and products, but anybody following music news knows that this is a direct response to Canada’s new streaming tax. Quite honestly, it’s a good one.

This summer, Canada implemented a new 5% tax that affects DSPs earning more than $25M in the country. The revenue from this tax will be funneled towards programs that support musicians and independent broadcasters.

Let’s be real, $12.69 a month for access to the virtual history of recorded music is still a steal. I applaud the Canadian government for finding new ways to support artists, even as it results in DSP price hikes. DSPs could be charging more for their service while also paying artists more, and while the tax is not a direct payment to artists, it’s a great stopgap measure.

Key Reservoir Media shareholder calls for strategic review of strategy in effort to maximize shareholder value

Irenic Capital, a hedge fund with an 8% ownership stake of Reservoir Media issued a statement this week calling for a strategic review of Reservoir.

Reservoir is a publicly listed music copyright holdings company. Their share price is up 30.5% YoY and revenue ($144M) is up 14% YoY. So why raise a big stink?

According to MBW, there may be some politics at play here. Wesbild, the firm that owns 44% of Reservoir, is closely associated with the Khosrowshahi family—the founder and CEO of Reservoir is Golnar Khosrowshahi. It’s quite possible that Irenic finds issue with this incestuous relationship.

Another potential factor at play is the implosion of Hipgnosis just this past year. Irenic could be attempting to shore up Reservoirs strategy in order to avoid a similar meltdown.

Either way it will be interesting to see what happens with this historic music company.

(Disclaimer: I am a Reservoir Media shareholder)

Alright folks, that’s it for this week. Let me know what you think about the stories we covered today, and enjoy your weekend!