Deezer has announced it is making changes to the way it allocates revenues to tracks later this year based on its recent work with Universal Music reviewing the way the streaming business works. Those changes, Deezer and Universal say, will result in the streaming service employing an “artist-centric model”, something Universal boss Lucian Grainge has been banging on about ever since the start of the year.
The new system will see Deezer favour “professional artists” and tracks actively selected by users, so that more money flows to them than the “hobbyist artists” and music pushed to users by an algorithm. Deezer will also replace all the white noise and bird song that has been pushed onto its platform with its own functional audio that won’t pull any money out of the royalty pool.
Music streaming is a revenue share based on consumption share business. Each month each streaming service allocates a portion of its revenues in each market to each track, and then shares that allocation with the labels, distributors, publishers and collecting societies that control the copyrights in it.
Under the current system, the initial track allocation process asks what percentage of overall listening any one track accounted for, and then allocates that percentage of the money to said track. All tracks are treated equally, oblivious of who made or delivered them, with functional audio like all that white noise and bird song treated no differently than pop music.
Lots of issues have been raised about the track allocation process over the years, although mainly by artists, songwriters and the independent music community. But then, at the start of the year, in a memo to staff, Grainge declared that it was now clear to him that “the economic model for streaming needs to evolve – as technology advances and platforms evolve, it’s not surprising that there’s also a need for business model innovation to keep pace with change”.
Therefore, Grainge declared, the current system should be replaced with an “artist-centric model”. Quite what that meant wasn’t clear at the time, although it was clear that the Universal chief was particularly pissed off about all the functional audio being treated the same as the music released by his labels.
Others speculated that there was also concern at the major about all the music being pushed into the system by hobbyist musicians which is also treated the same as tracks by established artists.
After Grainge ranted about all this in his memo, Universal then announced it was working with both Tidal and Deezer to investigate what an “artist-centric” model for streaming might look like. Meanwhile, senior execs at both Sony Music and Warner Music also started to express similar concerns about the current system employed by streaming services for the purposes of track allocation.
Today’s announcement from Deezer sets out three main reforms which will initially go into effect in its biggest market, France, later this year.
First, Deezer will “attribute a double boost” to what it defines as ‘professional artists’, which are “those who have a minimum of 1000 streams per month (and) a minimum of 500 unique listeners”, all “in order to more fairly reward them for the quality and engagement they bring to the platforms and fans”.
Second, Deezer will also assign “a double boost for songs that fans actively engage with, reducing the economic influence of algorithmic programming”.
And finally, “Deezer is planning to replace non-artist noise content with its own content in the functional music space, and this won’t be included in the royalty pool”.
There are also further commitments from Deezer to crack down on stream manipulation and fraud.
It’s not clear if any artists have actually been consulted about this “artist-centric” model. That said, most artists would likely support functional audio being taken out of the royalty pool.
And many would probably support active rather than passive streams getting a bigger allocation, not least because many assume that major label releases and big name artists get more algorithm support anyway.
The distinction between ‘professional’ and ‘hobbyist’ artists is potentially more divisive, even if the threshold for qualifying as professional is relatively low.
Deezer and Universal presumably hope that that threshold can distinguish between hobbyist artists – ie people who make music for fun but still upload it to the streaming services – and independent and DIY Phase artists – who make or aspire to make some or all of their living from music, but who currently enjoy relatively low traction on the streaming services.
Maybe it does, maybe it doesn’t. Even if it does, it is nevertheless Deezer and Universal Music officially stating that music from hobbyist artists should be treated differently, which is a bold position to take.
Deezer does note that its data analysis “showed that fans mostly consume music from the artists they love and show little interest in music from hobbyists or functional music”.
However, as it is, if people don’t listen to music from hobbyists, then they just don’t get allocated any of the money. And if, say, five people do love and listen to music from a hobbyist artist, driving a few hundred streams each month, is it right for the industry to say that music and those artists should be treated differently and get less money allocated to them?
I mean, if there is one thing we all know about music, it’s that popularity and artistic merit are not necessarily connected. So it will be interesting to see how artists respond to that element of the artist-centric model that has been diligently developed on their behalf by a bunch of non-artists.
And talking on the non-artists involved in developing the artist-centric model, here are some of them saying things…
Deezer CEO Jeronimo Folgueira: “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. At Deezer we always put music first, providing a high-quality experience for fans and championing fairness in the industry”.
“We are now embracing a necessary change, to better reflect the value of each piece of content and eliminate all wrong incentives, to protect and support artists. There is no other industry where all content is valued the same, and it should be obvious to everyone that the sound of rain or a washing machine is not as valuable as a song from your favourite artist streamed in hi-fi”.
Universal Music EVP and Chief Digital Officer Michael Nash: “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 100,000 or 100 million”.
“With this multi-faceted approach, music by artists that attracts and engages fans will receive weighting that better recognises its value, and the fraud and gaming, which serves only to deprive artists their due compensation, will be aggressively addressed”.
“Embracing the commonly shared objectives we highlighted at the outset of this chapter in our partnership, together we’ll maintain a flexible and adaptive approach. As the ever-evolving music landscape continues its rapid transformation, UMG and Deezer will rigorously address the impact of these changes as we incorporate new insights from data analysis, and fine-tune the model, as appropriate”.
Universal Music France CEO Olivier Nusse: “After extensive engagement with Deezer throughout 2023, we are very proud to be pioneers in France in the highly anticipated rollout of their version of the artist-centric model. This comprehensive initiative will much more effectively value fan engagement and active streaming of music created by artists”.