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UMG & Deezer Try “Artist-Centric” Royalties

Earlier this month, Universal Music Group and Deezer announced the launch of a comprehensive new streaming model, designed “to better reward the artists, and the music that fans value the most.” The two companies have predicted that this new model, which they have dubbed as “artist-centric,” will increase payouts to “professional artists” by roughly 10 percent by doubling the weight of their streams. The “professional artists” designation is defined as those who have a minimum of 1,000 streams per month and at least 500 unique listeners.


The new model would also create a “double boost” by doubling the weight of streams where fans actively search for the artist. This essentially means that revenue from streams of songs by popular artists who fans are searching for will be 4x larger than revenue from streams of less popular artists who get algorithmically recommended. Deezer’s CEO stated that “This is the most ambitious change to the economic model since the creation of music streaming and a change that will support the creation of high-quality content in the years to come.”


Additionally, to improve the quality of content on the platform, Deezer will work to cut down on non-artist “noise audio” and fraudulent streams. The noise audio will be demonetized, with Deezer also limiting the upload of certain music which is deemed to not be of high enough quality. A stricter fraud detection system will also be put into place as Deezer estimated that roughly 7% of streams on its platform in 2022 were fraudulent.


However, portions of the model are already facing criticism from a variety of sources, including Believe, TuneCore, and MIDiA’s Mark Mulligan. All three have referred to the plan as being a “reverse Robin Hood” plan, alleging that it rewards larger artists while penalizing smaller ones.


In a statement to its website, Believe wrote that “all artists shall be compensated equally by streaming services regardless of their stage of development. We strongly oppose an unfair ‘reverse Robin Hood’ system that is centered around taking compensation from rising artists to allocate it to top and established artists. Further, it is our belief, based on data, that such a system would reduce diversity and discourage creativity.”


In his detailed breakdown of the plan, Mulligan highlighted many of the ways smaller artists on Deezer will suffer. He noted that artists with less than 1,000 streams make up roughly 80% of all artists and that “A streaming royalty mechanism that takes from 80% of artists to redistribute to 20% does not feel very ‘artist centric.’”


Mulligan also discussed the importance of unsigned artists to streaming platforms like Deezer. According to his research, artists without record labels grew streaming revenue by 60% while major label artists only grew it by 35%. However, artists without record labels only constitute 8% of global streaming revenue. Considering that these artists already receive inequitable revenue distribution compared to their contributions, UMG and Deezer’s plan would only heighten these issues.


 

As not everyone has the time or preference for audio content, this post is a text version of a segment from the latest episode of our podcast. If you'd like to listen to the podcast, you can find it here:


Sources About the Royalties Model:



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