Merlin Files Lawsuit Against Triller for Breach of Contract Over Unpaid Music Licensing Fees

Table of Contents

1. Key Highlights
2. Introduction
3. Allegations Against Triller
4. The Broader Context: Triller's Financial Troubles
5. Industry Impact and Future Outlook
6. FAQ

Key Highlights

• Merlin, representing independent labels, has sued Triller for over $2.55 million in unpaid music licensing fees linked to a 2020 agreement.
• The lawsuit claims that Triller violated a "most favored nation" clause and failed to honor stock warrants after a merger.
• This case adds to Triller's growing legal woes, including previous lawsuits from major labels like Sony Music Entertainment and Universal Music Group.

Introduction

In a digital landscape dominated by short-form video platforms, licensing agreements serve as the backbone of the music industry's transition into social media. A recent lawsuit filed by Merlin, a global digital music licensing organization, against Triller—a direct competitor to TikTok—revealed troubling insights into how financial obligations can impact business relationships in the ever-evolving entertainment sector. Amidst a backdrop of previous legal struggles and mounting debts, this case highlights complex contractual obligations and the ramifications of unpaid licensing fees.

Merlin’s lawsuit, filed in the U.S. District Court for the Southern District of New York, centers around an alleged breach of contract that not only demands financial restitution but also questions Triller's fiscal management and communication around stock warrants. This article delves into the details of Merlin's complaint, explores the implications of the ongoing litigation for both parties, and examines the broader trends in music licensing agreements within the evolving digital marketplace.

Allegations Against Triller

Merlin’s complaint, lodged on March 27, 2025, alleges that Triller failed to honor a "most favored nation" (MFN) clause embedded in their licensing agreement. This clause stipulated that if Triller entered into a licensing agreement with another entity offering higher fees, Merlin was entitled to the same elevated rates.

The origins of this financial grievance trace back to a previous lawsuit involving Triller and Sony Music Entertainment. In August 2022, Sony accused Triller of non-payment of millions in licensing fees for music utilized on its platform. The resulting settlement required Triller to pay Sony $4.57 million, but during the legal proceedings, it emerged that Triller had offered Sony a more favorable deal than it had provided Merlin. This revelation triggered a reconsideration of Triller’s financial commitments to Merlin.

Financial Stakes and Contractual Obligations

According to the complaint, Merlin and Triller had previously agreed on an outstanding obligation of $2.55 million that Triller was to pay. However, Merlin contends that this payment was never fulfilled. Additionally, another aspect of the agreement involved a warrant granting Merlin an option to purchase Triller stock at a predetermined price. As reported, Merlin has not received assurance from Triller regarding how these warrants would be handled post-merger, raising concerns about compliance with contractual terms.

"The failure to deliver any of the promised new warrants, combined with Triller’s apparent disregard for its financial obligations, necessitates legal recourse," Merlin stated in its complaint.

The Broader Context: Triller's Financial Troubles

The controversy surrounding Triller is indicative of wider financial struggles faced by the platform, reflecting its tumultuous journey since launching in 2019. Multiple lawsuits have compounded Triller's troubles, leading to a series of settlements that have shaken investor confidence. Besides the ongoing case with Merlin and previous disputes with major labels, the company has also faced legal action from investment groups challenging its financial practices.

In early 2024, a regulatory filing disclosed that Triller owed over $23 million in unpaid music licensing fees, suggesting broader systemic issues within the company. These revelations about financial mismanagement raise significant questions not only about Triller's business model but also about its prospects in the competitive landscape.

The Merger and Its Implications

In 2023, Triller merged with an entity called AGBA, which enabled them to list on the NASDAQ. At that time, the new entity announced that it would allocate 50 million shares aimed at settling ongoing legal and financial obligations. Analysts speculated whether this capital infusion would stabilize Triller financially. However, the fluctuating stock price and ongoing debt suggest a different narrative, underlining the precarious nature of Triller's operational fundamentals.

The merger and subsequent trading activity have puzzled industry experts. As of late March 2025, Triller's shares hovered around $0.64, a significant decline from their trading debut. This volatility might affect its ability to honor financial commitments, including those stemming from legal agreements with music rights holders like Merlin.

Industry Impact and Future Outlook

The outcome of the Merlin lawsuit could potentially reshape the business practices of numerous short-form video platforms that rely on similar licensing agreements. As artists and record labels push for more favorable terms in digital music usage, attention will shift towards establishing concrete guidelines that protect their interests.

Lessons from Legal Disputes

Legal disputes such as the one between Merlin and Triller underscore the necessity for transparency and accountability in contractual agreements. The music industry is particularly vulnerable to financial disputes due to its reliance on digital platforms for revenue, making it imperative for all parties to honor established agreements.

Furthermore, this case highlights the increasing complexity of navigating digital licensing laws, particularly as they pertain to independent labels who may not have the same resources to negotiate terms as major corporations. As pressure mounts for platforms to comply with contractual obligations, there may be a push for regulatory reforms to protect creative rights in the digital marketplace.

FAQ

What is the basis of the lawsuit against Triller by Merlin?

The lawsuit is centered on the breach of a licensing agreement that included a most favored nation clause and provisions regarding stock warrants.

How much is Merlin seeking in damages?

Merlin is seeking $2.55 million in unpaid licensing fees and damages related to the failure to deliver warrants.

Why did Triller merge with AGBA?

The merger aimed to facilitate Triller’s listing on the NASDAQ and provide financial stability through capital freed up for settling legal obligations.

What are the broader implications for the music industry?

This lawsuit could set a precedent for how licensing agreements are negotiated and upheld within the digital media landscape, potentially resulting in stronger protections for independent music rights holders.

How has Triller's financial health been affected by these lawsuits?

Triller is facing significant financial liabilities, with allegations of over $23 million in unpaid licensing fees to various music labels impacting its operational viability.

With the stakes high for both Merlin and Triller, this case not only accentuates the challenges faced by digital platforms but also calls for stringent enforcement of contractual commitments essential for fostering trust within the music industry. As the lawsuit unfolds, industry insiders and observers will keep a keen eye on its potential ramifications.