Deezer has launched a new website and social media campaign to publicly champion a user-centric payment system (UCPS) and is planning to launch a pilot in France early next year – if it can get rightsholders onboard.
Speaking to journalists at a briefing in Paris last week, the company said that it has a “technical solution in place”, the implementation of which “does not require significant investment” and is now in talks with rightsholders and French policy makers to rally support for the new system.
Music companies that support Deezer’s UCPS proposal so far include Because Music, Wagram Music, Play Two, Idol, Tot ou tard, Outhere Music, #NP, Believe Distribution Services, Six et Sept, International Artist Organization of Music, FELIN, UPFI, MMF France and GAM.
Over 40 labels globally have agreed to Deezer’s UCPS, including the majority of French labels, but there are notable major absentees from the list of partners shared by the company.
Deezer, which has 14 million monthly active users, is majority owned by Access Industries, the full owner of Warner Music Group.
The streaming sector currently uses a market share model based on overall market share to calculate payments, which means that artists get a percentage of total royalties based on the percentage of total plays their music accounts for across the whole service.
This system sees top streaming artists and genres get paid a disproportionate amount of money compared to smaller and more niche acts and genres, argues Deezer. A ‘user-centric’ model, on the other hand, would see streaming revenues paid to the artists that each user listens to.
According to Deezer, the artists currently at the bottom end of the scale in terms of streaming revenues could potentially earn around 30% more in a ‘user-centric’ system. Top streaming artists could potentially earn around 10% less.
A shift to UCPS, says Deezer, would not only make the streaming industry fairer for artists but it could also eliminate, or at least drastically reduce, streaming fraud, i.e. ‘fake streams’ generated by bot accounts, because UCPS would only distribute the revenues from that particular bot account.
MBW suggested in June that ditching the current ‘service centric’ licensing model for a ‘user-centric’ model would help tackle streaming fraud more effectively.
In July, Because Music boss Emmanuel De Buretel also came out strongly in favor of the industry making this change, citing both fairness for artists and the issue of fraud, arguing that a User Centric Licensing system “would reduce the share of ‘fake streams’” and “ensure a better flow of income between artists and titles”.
Alexander Holland, Deezer
As early as Q4 last year, BMG CEO Hartwig Masuch told MBW’s sister publication Music Business UK in Q4 last year that “the user-centric licensing debate should be a next very clear battlefield in the evolution of streaming”.
Added Masuch: “For me, it is simply a question of fairness. Some services may like to say it won’t make too much difference, but that does not matter as much as being able to tell artists, ‘This system is fair, and this is how it works.’”
Two additional arguments put forward by Deezer in favour of the implementation of its UCPS is that it would fix a distortion on the charts caused by the impact of younger listeners, and that it would avoid a “concentration on intensive users”.
According to Deezer, 18-25 year olds represent 19% of all of its subscribers, but generate 24% of total royalties.
Furthermore, according to data from an analysis of Deezer’s French streaming figures for 2018, users who stream over 100 artists per month account for just over 40% of the user base and yet generate nearly 70% of royalties.
As part of Deezer’s campaign to promote the adoption of a user-centric approach to distributing streaming royalties, the company has launched a #MakeStreamingFair social media campaign and a public facing website that explains the benefits of UCPS compared to the current market share-based system and
Premium Deezer subscribers can also use a tool on the website to see and share exactly how much of their subscription revenues today go to artists they listen to, as well as how they would be supporting their favourite artists if UCPS was in place.
Alexander Holland, Chief Content and Strategy Officer at Deezer commented: “Streaming has been the main innovation driver in the music industry for many years now.
“Digital technologies and data make it easier than ever to make sure that all artists and content creations have a fair playing field.
“A user-centric approach is the next logical step and would mean that fans directly support the acts they love.
“Getting rid of bot fraud is a welcome added bonus and would make sure that your subscription money goes where it’s supposed to – the acts you love.”Music Business Worldwide