MBW Reacts is a series of analytical commentaries from Music Business Worldwide written in response to major recent entertainment events or news stories. MBW Reacts is supported by JKBX, a technology platform that offers consumers access to music royalties as an asset class.
I am Emperor of the Music Business! What I say goes! Kneel before Zod!
At least, I am in this whimsical, illustrative fantasy.
Please, for the sake of statistics cloaked in storytelling, indulge me, and come along for the ride.
Oh, and kneel before Zod!
Right then, serfs. As of today, I’m launching a new music streaming royalty model.
It’s called ‘Tim-centric’, because it does precisely what I want it to. And what I want is for artists who have fewer than 500 monthly listeners on my chosen streaming platform to be paid… NOTHING.
That’s right. NOTHING.
I mean: NOTHING.
I will be launching ‘Tim-centric’ with one particular streaming platform partner, over which I wield significant leverage. A platform that loses tens of millions of dollars a year, while also somehow losing subscribers (!) in a growing global music streaming market.
A platform that, at this point, would honestly do well to hit half the billion-euro annual 2025 revenue target it teased investors with when it SPAC-merged onto the stock market last year.
Mentioning no names.
Are you wowed by the subversive innovation of ‘Tim-centric‘?
Has my swashbuckling commercial boldness knocked you sideways?
Conversely, are you disgusted with the disdain I’ve shown to those uploaders that some call ’emerging’ artists? And others, like me, call ‘statistically unpopular’ artists – or at least ‘currently unpopular’ artists?
Well, take a calming breath. Because none of these extreme reactions, positive or negative, are warranted.
When you boil it down, none of this is anything other than entirely predictable.
In truth, ‘Tim-centric’ is actually a pretty unoriginal copy – indeed, a more timid copy – of established models that already operate across the world’s largest and most successful tech platforms.
Said models are anchored in a defined numerical threshold of popularity before any ‘creator’ becomes eligible to earn a SINGLE DOLLAR.
- Uploading media to a YouTube channel? YouTube’s Partner Program will not enable you to monetize your videos on the platform until you have 1,000 subscribers, PLUS 4,000 valid public ‘watch hours’ in the past 12 months, or 10 million valid public YouTube Shorts views in the past 90 days;
- Uploading media to Facebook? The meta platform won’t monetize in-stream ads on your videos until you have 10,000 page followers PLUS 600,000 total minutes of video watched in the last 60 days;
- Uploading media to Twitter (aka X)? Under Elon Music’s ad revenue program, before you can even be ‘considered’ to be eligible to start earning money on X, you have to: (a) have subscribed to the Premium ‘verified’ tier of X; (b) have over 500 followers; and (c) have attracted at least 5 million impressions on your posts over the previous three months.
It’s a similar situation when it comes to buzzy ‘Creator Funds’ on giant tech platforms, via which uploaders are paid directly by the services. Examples:
- To start earning crumbs from TikTok’s ‘Creator Fund’, TikTokers must have 10,000 followers on their channel, PLUS over 100,000 authentic video views in the past 30 days. (That’s authentic video views – as in, no stream farms allowed);
- To start earning from Snap’s ‘Spotlight’ program, you must have at least 1,000 followers PLUS 1,000 monthly views. You also have to “post at least 10 times on 10 different days in that calendar month”.
The list goes on.
All of this makes some of the more hysterical reactions I’ve seen to Universal and Deezer’s ‘artist-centric’ announcement last week seem, frankly, a bit silly.
Because the most controversial, fiercely debated element of UMG x Deezer’s plan almost exactly mirrors YouTube, Facebook, Twitter, ‘Tim-centric’ etc.
Yet, in the case of ‘artist-centric’, unpopular artists (sorry, ‘currently unpopular’ artists) still earn something.
Big Tech’s approach would be to pay them naff all.
The ‘artist-centric’ model: a reminder
For context, let’s briefly remind ourselves of the details of Universal/Deezer’s proposed model, and how it differs from my less charitable (and generally-more-Silicon Valley) ‘Tim-centric’ suggestion:
- First comes the bit most people in the music biz seem pretty aligned on: The demonetization of what Deezer calls “non-artist noise”. That’s a muddy definition, but the upshot is we’re looking at millions if not tens of millions of tracks of ‘noise’ (think white noise, binaural beats etc.) plus instrumental ‘functional music’ (music for relaxation, music for sleep etc.) being de-monetized and/or replaced on Deezer. How? Deezer plans to substitute all third-party ‘non-artist noise’ on its themed playlists (white noise etc.) with its own first-party soundscapes. After it’s done this, it will decline to absorb any royalties from plays of this first-party audio – bulking up the royalty pool for everyone else. In addition, Deezer is going to introduce much tougher filters for new music, blocking masses of AI-made ‘non-artist noise’ from being uploaded to its service;
- The second, more contentious element of the Deezer x Universal payout model is, yup, what happens to artists with fewer than 500 unique monthly listeners (and less than 1,000 monthly listens) on the platform. Under the ‘artist-centric’ model, acts who have more than 500 monthly listeners + 1,000 monthly listens will see each of their streams counted twice in monthly royalty calculations from Deezer; Deezer’s total royalty pool will then be divided and paid out according to each act/distributor’s market share of total streams;
- There is also an additional X2 royalty multiplier applied in Deezer X UMG’s model to plays of tracks by popular artists that are actively searched out by a human, rather than recommended by an algorithm. This effectively gives these artists X4 the royalty of a stream of an artist with fewer than 500 monthly listeners.
But for now, let’s keep things simple, and keep focus on that baseline threshold: 500 unique monthly listeners on Deezer, plus over 1,000 streams in the same time period.
Useful question at this point: What might Universal and Deezer’s ‘artist-centric’ model do to the royalty pool on Spotify, if it was ported over to that platform like-for-like?
And when I say like-for-like, I mean with the exact same 500 monthly listener/1,000 listens threshold?
We can have a good guess.
According to MBW analysis of data on Spotify’s Loud & Clear website, there were approximately 8.13 million music artists on Daniel Ek‘s platform last year who failed to attract more than 500 monthly listeners.
But get this: Within that 8.13 million figure, there were 2.57 million artists who attracted more than 10 monthly listeners on Spotify, but less than 500.
And there were just 873,000 artists (less than 10% of all music acts on Spotify) who managed to attract more than 500 monthly listeners.
Here’s how that breaks down in terms of the approximately 9 million artists whose music was on Spotify in 2022:
The artists in the above chart that would be most decrying the Deezer ‘artist-centric’ model if it landed on Spotify tomorrow?
Those in the middle: The 2.57 million acts with over 10, but less than 500, monthly listeners.
All of those acts, by default, would, under ‘artist-centric’, see their per-stream royalty weighting worth half as much as a substantial sub-section of the 873,000 artists on the right. (That sub-section being the amount of the 873,000 with more than 1,000 monthly plays of their music – which Loud & Clear doesn’t tell us.)
Worth remembering: Spotify and Deezer will have pretty much the same volume of music from the same volume of 9 million artists; distributors in all sectors, working with artists of all sizes, are likely to distribute music to both platforms as a default position.
Where The trouble starts: Mixed incentives
So what have we learned so far? Two main conclusions:
- The Universal X Deezer ‘artist-centric’ model borrows from established minimum-popularity thresholds from Big Tech platforms. But unlike those Big Tech platforms, it doesn’t entirely de-monetize the streams of unpopular creators; and
- If the Deezer ‘artist-centric’ thresholds were ported to Spotify as-is, hundreds of thousands of artists with 500+ monthly listeners would commercially benefit – but millions of artists with lower-than-500-monthly-listener counts would see their royalties cut.
If you work in the music industry, whether you see these facts as a good thing or a bad thing will naturally depend on your own commercial incentives.
Important reminder: Unlike ‘creators’ on YouTube/Facebook/Twitter etc., artists in the music industry cannot (currently) directly upload their music to the biggest audio streaming services. Instead, they have to go via a distribution middleman – whether that’s a DIY platform like TuneCore or DistroKid, or the biggest music rights company in the world, Universal Music Group.
Consider TuneCore and DistroKid, then: These two businesses both run the same base commercial model – i.e. charging an annual fee to millions of artists for unlimited music uploads… no matter how popular these artists are (or ‘currently unpopular’ they are).
Imagine you ran either of these DIY distro companies: with UMG x Deezer’s model commercially penalizing (and therefore, potentially disincentivizing) millions of ‘currently unpopular’ artists who upload music, you might understandably not be delighted with the prospect of ‘artist-centric’ gaining industry-wide momentum.
Yet if your business is centered within those hundreds of thousands of artists with 500+ monthly listeners each – for example, if you ran a growing independent record label – you might think the ‘artist-centric’ commercial shift from ‘them’ to ‘us’ is a wonderful outcome.
You might also like the idea that ‘artist-centric’ might lead to a lesser ocean of releases to compete against in the years ahead.
It’s all a matter of perspective.
The future – and potential tweaks to the model
Where I can certainly sympathize with the likes of Denis Ladegaillerie – founder and CEO of Believe, owner of TuneCore – is when it comes to his concerns over where ‘artist-centric’ could go… and how those Big Tech-aping monetized minimum thresholds could change in the future.
Ladegaille’s company issued a statement earlier this week railing against some elements of UMG and Deezer’s new model. One of Believe’s key concerns?
“The risk that those [1,000 stream/500 listener] thresholds would be raised over time, affecting progressively more and more artists.”
- Could Deezer and UMG one day start upping the lower-limit of listener counts artists must reach in order to attain a ‘double royalty boost’?
- Might they then combine this with more of a YouTube/Facebook-style approach, completely de-monetizing artists who don’t hit these thresholds?
- And what happens if the Deezer ‘artist-centric’ model gathers pace and is, in some form, rolled out on Spotify as I suggested earlier? In that case, might the thresholds be much higher, in line with Spotify’s far greater audience vs. Deezer?
Quick math on that last point:
- Deezer, now a subscription-only platform, has 9.3 million global subscribers as of June 2023, vs Spotify’s global subscriber base at the same point of 220 million;
- In other words, Spotify has around 24 times the number of paying customers globally as Deezer;
- When you also count Spotify’s ‘free’ users, it had 551 million monthly active users at the end of June – some 59 times bigger than Deezer’s (subscription-only) global user base;
- Would the 500-listener minimum threshold applied for ‘artist-centric’ on Deezer therefore have to be multiplied by 24 times (12,000 monthly listeners) or indeed by 59 times (29,500 monthly listeners) if ‘ported’ over to the much-bigger Spotify platform?
Last week, Michael Nash, EVP of Universal Music Group, made sure to confirm that UMG and Deezer reserved the right to “fine-tune the [artist-centric] model, as appropriate” in the future.
For now, though, this prospect of a tweaked threshold limit – and how it might impact larger volumes of DIY artists, while also altering the very definition of ‘currently unpopular’ – remains conjecture.
As things stand, the ‘artist-centric’ model put forward by UMG and Deezer, including its minimum 500-listener threshold, isn’t really shocking. It’s a naturally appealing framework for any significant rightsholder working in popular music.
There are, though, already some parallels to be drawn with companies like YouTube, Facebook, and Twitter – companies with a long history of viewing the annoyances of ‘currently unpopular’ creators as little more than an irrelevance.
JKBX (pronounced "Jukebox") unlocks shared value from things people love by offering consumers access to music as an asset class — it calls them Royalty Shares. In short: JKBX makes it possible for you to invest in music the same way you invest in stocks and other securities.Music Business Worldwide