Earlier this year, Universal Music Group said that it was working with streaming service Deezer to “investigate potential new economic models for music streaming that more fully recognise the value artists create”.
This morning, the two companies have announced details of the first of these ‘artist-centric’ models, which will launch in France in the fourth quarter of this year before rolling out to other countries.
The new model is based around four key points:
- Deezer will give a “double boost” in its payouts to “professional artists” – that’s musicians who get at least 1,000 monthly streams from at least 500 unique listeners.
- Deezer will also give a double boost for “songs that fans actively engage with, reducing the economic influence of algorithmic programming”. So, that means tracks that listeners choose to listen to, rather than have served up on a personalised playlist.
- Deezer will replace “non-artist noise content” (think white noise, wave sounds etc) with its own “content in the functional music space”, which will not be included in the royalty pool when calculating payouts.
- Finally there’s the promise of an updated “and stricter, proprietary fraud detection system” to spot and remove “bad actors” who are trying to game the system.
“The goal of the artist centric model is to mitigate dynamics that risk drowning music in a sea of noise and to ensure we are better supporting and rewarding artists at all stages of their careers whether they have 1000 fans or 100 thousand or 100 million,” said UMG’s EVP and chief digital officer Michael Nash as the model was announced.
“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,” added Deezer CEO Jeronimo Folgueira.
Alongside the announcement, UMG and Deezer shared some stats from the research they have been conducting into streaming economics.
Among them: only 2% of all uploaders to Deezer (i.e. artists) have more than 1,000 monthly unique listeners on the service. Meanwhile, the top 3% of uploaders generate 98% of its streams, with the other 97% only accounting for 2%.
Deezer also said that its existing fraud-detection system has identified that around 7% of its streams in 2022 were “fraudulent”.
That’s considerably higher than the 1%-3% figure estimated by a prominent study published by France’s Centre Nationale de la Musique last year, which drew on data from Deezer, Spotify and Qobuz as well as labels and distributors.
(The fraudulent streams aspect of today’s announcement packs an extra punch, given reports this week of Swedish criminal gangs using Spotify for money-laundering.)
Finally, Deezer said this morning that streams tagged as ‘noise’ accounted for around 2% of streams on its service. These are the tracks that will be replaced by “its own content in the functional music space”, which won’t be included in royalty calculations.
It’s a big announcement, but there are some unanswered questions. If Deezer is planning to apply this model across its service, how will UMG’s major-label rivals and independents feel about a model co-designed by Universal?
The announcement also noted that “Universal will collaborate with Deezer on the development of Deezer’s fraud detection tools and AI detection”. Rivals will be keen to understand whether they will get comparable access to the data generated by these tools.
The phrasing “songs that fans actively engage with” for the second ‘double boost’ is open to interpretation too.
The mention of reducing the economic influence of ‘algorithmic programming’ points to personalised playlists and Deezer’s ‘Flow’ recommendations feature, but does that mean regular editorial playlists – the un-personalised ones created by Deezer’s editors – will be treated separately.
Finally, Deezer hasn’t given any more details at this point of how it will source its functional audio: for example whether it will be created in-house, or bought in from external suppliers.
Questions, questions. But this is undoubtedly a big moment in the debate about streaming economics and new ‘artist-centric’ (a phrase that has been carefully coined by UMG to separate it from existing calls for ‘user-centric’ payouts) models.
There’s a limited scale here: Deezer had 5.6 million direct subscribers globally in the first half of 2023, with 3.6 million of them in France – the first country to be getting this new model.
(Another question: will the new artist-centric model also apply to Deezer’s subscribers through its B2B partnerships, where it powers the streaming services of other brands? Those account for another 3.7 million of its global subs.)
Still, this is a big moment for Deezer, which tried for several years to get a user-centric pilot off the ground with no success – reportedly some labels were resistant. Now with UMG as a partner, it is finally getting to try out a new model of streaming payouts.
Tools: platforms to help you reach new audiences
Tools :: Wyng
Through Music Ally’s internal marketing campaign tracking, we’ve recently discovered an interesting website by the…