Questions over the ‘money pool’ system of revenue payments to record labels are forcing a new conversation on ethical payment systems for artists, namely as millions of users and artists flock to music streaming apps amid the ongoing coronavirus pandemic and national lockdowns worldwide.
Currently, music streaming platforms use a ‘pool’ of revenues earned from subscribers and divides payments based on overall streams from users, per artist. But fairer models for music streaming, namely towards smaller or niche artists, have been proposed since 2014, with one music company leading the conversation since 2017, according to Music Ally.
Anton Gourman, Director of global communication for Deezer, explained how his company’s User-Centric Payment System (UCPS) business model aims to boost revenues for smaller artists across the online streaming industry.
He explains why UCPS aims to build “fairness” across the industry as more users take to music streaming platforms, as well as concerns over “bot fraud” and changing landscape in the relationship between artists and record labels.
Sputnik: Can you explain how a User Centric Payment System (UCPS) works compared to current compensation models? How will artists benefit under the new system?
Anton Gourman: UCPS is about fairness. We want the money from your subscription to only go to artists you actually listen to. That’s not the case today, where the payments are based on an artist’s overall market share on the platform. This means that today’s system benefits the biggest and most popular artists the most.
UCPS would tend to benefit local, smaller and niche artists and genres, and make things fairer from an audience perspective. In today’s system, younger audiences that stream more than older ones have much more influence on who gets paid, meaning that older listeners, who pay the same amount of money but stream less, don’t actually see the money they spend go to artists they listen to.
UCPS would also eliminate bot fraud. Today you can set up a bot network and get paid more in royalties for fake streams than you have to invest in subscriptions. With UCPS that becomes impossible, as each account only “moves” the money it pays.
Sputnik: What are the complexities in paying artists and labels under UCPS? How has Deezer trialled the programme and which data would music streaming platforms need to monitor?
Anton Gourman: We believe that switching over would be easy. We have everything in place on our side to run a pilot, and the technical aspects and reporting infrastructure are ready.
What takes time is to get rights holders on board and the dialogue is currently still ongoing. You can’t have two different payment systems in place at the same time. That means that all the labels have to agree to a pilot after analysing the data and potential impact.
Sputnik: Have you received any feedback on UCPS, either directly or via social media? Do you believe that more artists and users would support music streaming platforms under the new system?
Anton Gourman: The feedback has been mostly positive. In September 2019, we launched a website to help people understand UCPS. One of the things we show our users is how much of the money they contribute goes to artists they actually listen to. It’s not uncommon for that number to be between 10 to 15 percent.
But it can go even lower for people who are loyal fans of more niche artists. That means that you can be a huge music fan, pay your subscription each month, but only 10% or so of that goes to support the artists you love.
UCPS has also been part of the media conversation in Germany, where a number of high profile artists have called for the system to be implemented. We want to launch a pilot in France and Germany, so it’s great to see that we have some artists supporting the idea.
It’s important to remember that UCPS doesn’t change the amount of money that streaming companies pay out. Today, around 70% of our revenues go directly to rights holders and that would still be the case in the future.
It’s also important to remember that streaming companies like Deezer don’t pay artists directly, we pay the companies that own the copyright to the content that our users listen to. So we don’t have any insight into any conversations between labels and artists.
Sputnik: Music streaming is a disruptive industry and is building the future of how people discover new talent. What is the best way to push for UCPS in the music industry and who backs your initiative? How are they working with Deezer to make an impact for artists, both great and small?
Anton Gourman: Launching a UCPS pilot requires all the labels we deal with to be on board. The best way to push for UCPS is to continue to educate music fans by raising awareness with artists and music fans that it’s the fair way of paying for music streaming. But also, even more importantly, to continue working closely with our label partners and make sure they have all the data they need to understand the impact UCPS would have on the industry and their artists.