Last month, an agreement was announced between French streaming company Deezer and Universal Music Group (UMG) to introduce a new payment model. Once the champions of their version of a ‘User-Centric Model’, Deezer will offer from October a new system of revenue allocation they are calling an ‘Artist Centric Model’.
As active participants in the debate on streaming and keen early adopters of innovative business models, the independent music community has actively reacted to the announcement. The streaming manipulation provisions were welcomed as a step in the right direction, with mixed views on the proposals to reallocate revenues. Concerns were expressed about the way the deal was struck between two operators without wider consultation.
A New System of Allocation called an ‘Artist Centric Model’
Although the new proposal retains the concept of a single pot ‘pro rata’ revenue sharing mechanism, the difference lies in the higher value attributed to some streams compared to others, based on two factors. The first is a boost that would apply to artists who can boast 1,000 streams per month from at least 500 unique listeners. Deezer’s intention here is to differentiate between artists depending on whether they are ‘professional’. The second is linked to the way people listen to music. Under the proposed new system, active listening – songs that users search for and pick – would receive a double boost. This means streams of these tracks will carry double when calculating royalty payments.
Other provisions aim to increase the size of the royalty pool and include a better fraud detection system and the demonetization of so-called ‘noise content’ or ‘functional music’ (rain noise, relaxation music), which Deezer will replace with their own tracks.
Welcomed Provisions on Revenues but Concerns about Smaller and Emerging Artists
In a joint guest column, Martin Mills (Beggars Group), Darius Van Arman (Secretly Distribution), Stephan Bourdoiseau (Wagram Stories) and Emmanuel de Buretel (Because Music) proposed interesting alternative ideas for consideration, while stressing that this new system had ‘the potential to be revolutionary’ if it became widespread across more digital platforms. Since the column was published, Wagram has signed up to Deezer’s proposed model while maintaining that it could be improved.
Other companies also reacted. At [PIAS], in a memo to staff, Kenny Gates flagged one should be cautious about a system proposed by a major, but he ‘[failed] to see what negatives, if any, this initiative might carry’ as his team expects to see an increase in revenues from Deezer. Believe, through their CEO Denis Ladegaillerie, expressed concerns, fearing that the thresholds introduced could be raised over time and stated that ‘all artists shall be compensated equally by streaming services regardless of their stage of development’. Taking up the analysis of media and technology analyst Mark Mulligan, Ladegaillerie worried the system could create a ‘reverse Robin Hood effect’, where revenues from smaller acts would be transferred to established artists.
More Debate Needed to Avoid a Two-Tier System
Similarly, trade associations over the world reacted to the news with caution, flagging the potential impact on diversity and the need for more information and debate and at the same time welcoming the move to tackle manipulation and focus on music. IMPALA, which represents independent music companies and national trade associations in Europe and has engaged in a reflection on the future of streaming for several years, publishing several plans on the topic, welcomed this effort to grow the debate, while expressing concern that ‘Deezer proposal [had] been developed in a vacuum’. In a guest column, IMPALA’s Executive Chair Helen Smith elaborated on the organization’s position, acknowledging that some of Deezer’s deal provisions resonated with their own proposals, but also reiterating that ‘IMPALA [would] always oppose thresholds that would harm smaller players and smaller markets’. IMPALA pointed to the proposals in its streaming plan, including the ‘Artist Growth model’, originally developed by AIM, the Association of Independent Music in the UK, as an alternative which could support emerging artists.
In the same vein, AIM’s CEO Silvia Montello highlighted these positives but feared that the introduction of thresholds could create a ‘two-tier’ system and ‘disadvantage those navigating the first steps of their careers or working within emerging genres’. Across the Atlantic, Richard Burgess, A2IM’s President and CEO saw the new plan as an ‘effort to reduce the gaming of the system, while boosting payments to professional artists’. Most importantly, he declared Deezer officials assured him that they had ‘plans to ensure that emerging artists are not disadvantaged’.
Regrets About Lack of Consultation in France
In France, Deezer’s home market, where it claims a 28% share of the music streaming subscribers for 2022, both industry associations who represent national independent record companies expressed concern about the lack of consultation at local level on this deal which will have repercussions for the entire music industry. While UPFI welcomed a ‘courageous bet’ aiming at increasing the value of music creation, they expressed reservations about the adoption of thresholds that could impact new artists and diversity in the long run. As for FÉLIN, they saw in Deezer’s new model a way to transfer remuneration from emerging acts to ‘more bankable artists’ and the ‘very opposite of greater fairness’. They called on the French government authorities to intervene directly in the regulation of streaming revenues.
Independent music companies and organizations have voiced a shared concern about a model based on an agreement between the dominant market player and a digital platform, which is a key player in some territories such as France or Brazil. This proposed model enshrines the idea that Deezer is a service focused on music, as opposed to a platform providing access to any type of audio and sound, which was collectively seen as a positive, but the impact of this type of model on smaller artists and diversity is a shared concern for independent music companies, which are often the first to invest in new talent and account for 80% of new releases.
Original post: https://www.impalamusic.org/spotifys-proposal-to-reform-streaming-the-view-from-impala-members-and-the-questions-to-be-asked/ Brussels, 7 December 2023 Gathering views from members in More
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