Streaming

It’s been months since the concept of “artist-centric” royalties was introduced in a January memo from Universal Music Group Sir Lucian Grainge to his staff. It raised a considerable amount of speculation for a company memo, even though for a while the concept remained rather vague. Something about streaming manipulation, functional music, and a model that “supports all artists.”

Now, though, that speculation is over: Deezer has announced its UMG-backed proposal, with plans to launch it soon.

We need more clarity, but this proposal definitely adds to the streaming debate, which is important if we want to improve the streaming ecosystem. The European recorded music market is still far from where it should be – around 42% of its market peak when adjusted for inflation, following the absence of any substantial change in streaming subscription prices over the past decade and a half.

How do we fix this?

First, we need to see higher subscription prices. We have seen some increases, but they are still minor. We just can’t escape that fact. Then there are ideas about how the business can reallocate royalties, and we need as many voices as possible to take part in the discussion. IMPALA started t this wo years and a half ago with its 10-point plan to make the most of streaming, which we revisited in April (infographic here and full plan here). We think Deezer’s proposal is ambitious, and some of it resonates with our own. But it also includes some more controversial provisions.

Let’s start with them.

I’m referring of course to Deezer’s plan to set a threshold for boosts in royalties, available only to acts that get a certain number of streams from a certain number of listeners. Where would the additional revenues go? How many artists would benefit? And what does it say about the stability of the system that an artist could attain “professional” status for a month, only to potentially lose it in following one?

More clarity is needed. Independent labels account for 80% of new releases (including artists patiently awaiting discovery, artists who cater to niche audiences, artists from smaller territories and newcomers just starting their artistic journey). We must avoid a two-tier approach that would impact not only their work, but musical diversity as a whole. We understand that this is not Deezer’s objective, but IMPALA will always oppose thresholds that would harm smaller players and smaller markets, a position that was set already in our first streaming plan. Let’s make sure it’s not the case here.

Key to IMPALA’s approach is a progressive redistribution of revenues where tracks would see a boost in royalties beneath and before the point of global ubiquity, and those which are in the top echelon (however that’s defined) would lose a small percentage of revenue. That’s the Artist Growth model – initially developed by AIM in the UK. We feel this can lead to a healthier ecosystem and more opportunity for new creators from diverse genres.

This could be controversial as well, which is fine, as long as we remember that change must be discussed – and negotiated. It shouldn’t simply be imposed in a deal between two market players, even when one of them is the leader of the market. And while Deezer and UMG will launch this plan soon, until other stakeholders agree, this “artist-centric” model will really be UMG-centric.

Deezer’s plan also has a lot of positives, though.

Who could argue that streaming manipulation needs to be addressed, for example? We absolutely support Deezer’s commitment there, which is also point 4 of IMPALA’s proposal, but we will need to review the idea of caps on individual accounts as we wouldn’t want superfan streams to be devalued.

Deezer also want to address “noise” content is also an issue that Deezer seeks to address. We flagged this in our plan, as a way to address revenue dilution. So we welcome this move and would appreciate other ideas to handle this content, which has a place, as long as it doesn’t dilute royalties.

Deezer’s second proposal for boosts in royalties, for tracks that fans actively engage with, is also interesting. That’s also the rationale behind our “Active Engagement” model, put forward in our plan in 2021. There are different ways one could do this, but it’s great to see the idea getting traction.

Is Deezer ready to make the imaginative leap to embrace the “Fan Participation” model, also proposed by IMPALA, to offer creators a space within the service where they could develop incremental revenues from direct relationships with fans? If so, we could be talking about really exciting and important changes in the streaming market.

We hope that services will also look at ways of rewarding artists who record longer-form music. That’s a conversation we started with our “Pro rata Temporis” model. The issue needs to be addressed without at the same time harming shorter tracks.

In the meantime, we need more extensive discussion and debate. We invite all interested parties to explore IMPALA’s plan and share their perspectives as we collectively navigate the evolving streaming landscape.

Let’s keep the ideas coming!

Helen Smith is the Executive Chair of IMPALA, the European non-profit organization that represents independent music companies, with key issues that include copyright, sustainability, diversity and inclusion, streaming reform, AI, finance and digital services as well as strategic relations with key partners through the Friends of IMPALA program.