TikTok’s clock is ticking…
TikTok’s countdown to sell has been set, leaving everyone wondering… what now? Chris Castle has thoughts.
by CHRIS CASTLE of Music Tech Policy
It finally happened–the US government has recognized the danger of TikTok in the narrowly tailored, content neutral, time, place and manner national security regulation brought about because of the national security concerns about TikTok I described at the Music Business Association conference in 2020. (See Protecting Americans from Foreign Adversary Controlled Applications Act.)
TikTok will fight the legislation in court, of course, and use their dopamine injection algorithms to put susceptible users in motion to do their bidding. TikTok’s CEO has already started that drumbeat having failed spectacularly to stop the divestment legislation. Of course what he ought to do is fire all of his lobbyists and comms people who have done the old Potomac Twostep–recommended a strategy that cost him a fortune but in reality just teed up the litigation, the next billable time goat fest.
What now? Any potential buyer has to be looking at a number of factors, one of which is liability. TikTok is a mass infringer, and aside from anecdotal evidence of songwriters who continually find their unlicensed catalog on the platform, I offer for evidence the latest push to get licenses by TikTok’s confederates MRI and Songdex Marketing. Why the push now? Maybe they need licenses so they don’t have to include that risk factor in their acquisition documents (or IPO–don’t rule that out).
The fact is that none of these rogue services are in compliance and licensors really have no idea whether their royalty statements are even in this solar system much less on this planet. What we do in those situations is audit. And if necessary, we sue.
But–think about what is likely to happen if there is a forced sale. How willing do you think a buyer will be to take on TikTok’s liabilities for audits or lawsuits? How likely do you think it is that TikTok will step right up and timely resolve audits or lawsuits with an eye on a pending sale? How likely is it that a TikTok buyer will require the company to go through a prepackaged reorganization bankruptcy before any sale to wash away as many liabilities as possible?
I think that if anyone has an audit right or lawsuit against TikTok that they are thinking about executing, there’s no time like the present to get that done. The clock is ticking and you have to decide if you want to be chasing a buyer for claims or recovery, or perhaps worse yet be an unsecured creditor in a bankruptcy.
Tick tock.
