The announcement of an agreement for an “artist-centric” payment model between Universal Music Group (UMG) and streaming service Deezer sent waves through the music industry last month.
Now another music recording company is signing up to Deezer’s new payment model.
France-headquartered indie music company Wagram Music announced on Monday (October 2) that it has signed an agreement with Deezer (also a France-headquartered firm) for an “artist-centric” payment model “aimed at improving the distribution of recorded music revenues and increasing its value.”
Wagram Music describes itself as a “leading independent label in artist development.”
It owns eight distinct music labels, including Cinq7, Chapter Two Records, Belem and WLab. It also has distribution agreements with a number of indie labels including Beggars, Radio Nova and Buddha Bar.
Wagram’s announcement didn’t offer specifics as to how its own agreement with Deezer will work, but we have details, provided last month, about how Deezer’s artist-centric deal with UMG will work.
Under that agreement, “professional artists” – defined as those with a minimum of 1,000 streams per month and a minimum of 500 unique listeners on Deezer – will receive a so-called “double boost” to royalty payments. That is, when calculating royalty payments, streams of their music will carry double the weight of “non-professional” musicians.
The Deezer model will also apply a ‘double boost’ – doubling the weight of streams again – for played tracks by artists that fans have actively searched for.
According to the Financial Times, the model is expected by UMG and Deezer to “lift payouts to professional artists” by 10%.
“For years, all stakeholders in the music industry have agreed that the traditional ‘Market Centric’ system, which had the advantage of simplicity, needs to evolve,” Wagram Music said in a statement on Monday.
“The initiative from Deezer, with whom Wagram Music has been engaging in discussions about different ways of evolving the streaming model for a long time, aligns with this direction and offers a significant improvement.”
That’s in reference to the current “pro-rata” system of royalty payments used by most music streaming services today, under which the entire pot of royalty money raised by the service is divided among all artists according to the number of streams their music receives.
However, not everyone agrees that the “artist-centric” model is the best way to move forward, especially among those in the music industry who work with indie players.
Some – such as Believe CEO Denis Ladegaillerie – have argued that payment models like the Deezer/UMG model could discourage new musicians, as they would receive a smaller share of the money set aside for royalties by streaming services.
“The system can still be improved, and we invite the actors to seek out these optimizations… We will support any similar initiative aimed at improving the current distribution model, developing the value of music, while respecting competition rules, pluralism, and diversity.”
Stephan Bourdoiseau, Wagram Music
“We’ve seen proposals from some of the DSPs around ‘let’s not pay any royalty to any artists that generate less than 1,000 streams per month’,” Ladegaillerie told MBW in a recent podcast interview.
“That’s essentially an artist at the beginning of their career, an aspiring artist, and 1,000 streams a month is probably 200 to 300 listeners listening to that artist on a regular basis. Why would you not pay such an artist? It doesn’t make any sense. What signal as a music industry do you send to aspiring artists if you go in that direction?”
And, in fact, Wagram Music President Stephan Bourdoiseau recently co-authored an opinion piece with leaders of other prominent independent music companies that argued there are “problems” with Deezer and UMG’s artist-centric model.
“In an environment where the current system has been criticized for not fairly or adequately supporting non-superstar artists and releases, any solution brokered by the biggest music company [Universal Music Group] that appears to further consolidate revenues in the music industry has to be given a rigorous review by other rightsholders,” the opinion piece stated.
It suggested augmenting the artist-centric model with a number of changes that would effectively increase the amount of money flowing to lesser-known artists. That includes “a limitation on payable streams, akin to a system of taxation, [that] could be applied to the top ranks of streaming beneficiaries to flow a slice of incremental income into the pot, to the benefit of those newcomers that need time to create a fan base.”
“Wagram Music has for years been supporting a wide range of artists that create valuable and engaging content, including some of the biggest French stars, as well as great emerging talent, and the new artist-centric model will reward them for continuing doing so.”
Jeronimo Folgueira, Deezer
Such a system would “support the eco-system that makes the success of future stars possible,” the opinion piece added.
It also suggested that streaming services could “charge a small flat amount for every track delivered,” with the money going into the royalty pot in recognition of the fact that “there are costs to uploading and storing tracks that do not create value for the service.”
“The system can still be improved, and we invite the actors to seek out these optimizations,” Bourdoiseau said in a statement on Monday announcing the artist-centric agreement with Deezer. “We will support any similar initiative aimed at improving the current distribution model, developing the value of music, while respecting competition rules, pluralism, and diversity.”
Commenting on the deal with Wagram, Deezer CEO Jeronimo Folgueira said: “We’re very happy that Wagram Music, its labels and artists are joining the launch of the artist-centric model in October.
“This will benefit all producers, as well as majors and independents. Wagram Music has for years been supporting a wide range of artists that create valuable and engaging content, including some of the biggest French stars, as well as great emerging talent, and the new artist centric model will reward them for continuing doing so.”Music Business Worldwide
