Universal and Deezer‘s showstopping announcement about their new ‘artist-centric’ royalty model yesterday (September 6) triggered a big reaction in the music business – and some big questions.
Amongst those big questions: Deezer says that, under the royalty calculations within this new model, it will apply a “double boost” to the streams of artists who have more than 1,000 monthly plays on its platform (from over 500 unique listeners). But if enough artists receive this “double boost” in a given month, might it then mean that the total amount of royalties due to be paid out by Deezer could exceed 100% of the royalty pool generated on the platform in this timeframe?
MBW heard this question posed by senior figures in the music rights business yesterday – and we asked the question ourselves ‘out loud’ in a think piece reacting to the Deezer x UMG announcement.
Now, UMG has clarified that such a scenario is, in fact, impossible.
A UMG spokesperson told MBW today that under artist-centric, “the total distribution will always equal the total royalty pool”, and that the new formula simply “reallocates the existing royalty pool”.
In other words: The ‘artist-centric’ streaming model will behave similarly, in terms of royalty distributions, to today’s dominant ‘pro-rata’ model, with a total, finite pool of royalties divided amongst artists/rightsholders based on their market share of streams.
When Deezer talks of a “double boost’”(or indeed a 4X boost, for popular artists whose music is actively searched out), it’s referring to the volume of streams attributed to each artist/label, not the royalty amount generated by each artist/label.
A boosted volume of streams for these artists, then, results in a boosted market share of total royalties.
But it doesn’t result in additional money being required for the royalty pool.
Deezer will implement the new ‘artist-centric’ royalty model for music by Universal Music Group artists in France next month.
Deezer’s plan is then to roll out the model to additional markets in 2024.
Discussing the launch of the new model yesterday, Jeronimo Folgueira, CEO of Deezer, said: “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 favorite artist streamed in HiFi.”Music Business Worldwide