[PIAS] boss Kenny Gates on Deezer x Universal’s ‘artist-centric’ model: ‘For labels who invest every year, relentlessly, in new talent, this has to be good news.’
A now-customary reminder of the context: The ‘artist-centric’ model, which will be adopted by Deezer for UMG artists in France from next month (October), is based around three key changes to the current dominant ‘pro rata’ royalty model:
Deezer will demonetize what it calls “non-artist noise” on its platform. Deezer says it will “replace” this content (white noise/rain noise etc. but also potentially “functional music” like instrumental music for relaxation) with its own first-party content on themed playlists. No plays of Deezer’s first-party “noise” content will generate any royalties, effectively ensuring that payouts that previously went to “non-artist noise” uploaders will instead go back into the royalty pool to be shared amongst music artists;
Acts who have more than 500 monthly listeners and 1,000 monthly listens on Deezer will, under ‘artist-centric’, see each of their streams counted twice (X2) in monthly royalty calculations. Deezer’s total royalty pool will then be divided and paid out according to each act/distributor’s market share of total streams using this weighting system;
An additionalX2 royalty multiplier will be applied in Deezer X UMG’s model to plays of tracks by sufficiently popular artists that are actively searched out by a human, rather than recommended by an algorithm. This effectively gives ‘lean forward’ plays of this music X4 the royalty of a stream of an artist with fewer than 500 monthly listeners.
In addition, though not strictly part of the royalty model changes, Deezer has promised to take a harsher line on streaming fraud, including the continuing refinement of a “stricter, proprietary fraud detection system”.
In the letter, published on Music Ally, Mills, Van Arman and co. confirm their approval of some elements of the Universal/Deezer model, namely “de-monetizing non-musical content, differentiating push and pull plays, and anti-fraud provisions”.
“A limitation on payable streams, akin to a system of taxation, 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.”
New Letter from heads of indie labels – including Beggars Group Chairman Martin Mills – calling for ‘those who do well to subsidize those below them on the ladder’
However, they also make clear that in their ideal version of the ‘artist-centric’ model, other elements would also be included. Such as:
A “small” and additional flat fee paid to services such as Spotify for every music upload – which would be charged to the distributor of that upload. This toll, says the indie label letter, would “recognize that there are costs to uploading and storing tracks that do not create value for the service”. (A per-upload charge would obviously not be great news if you’re a DIY service uploading tens of thousands of tracks a day.);
A “system of taxation” for the world’s richest record companies (i.e. the majors and/or other large-scale firms) that caps the monetary amount each of them can earn from streaming services. Money generated by said companies above this streaming royalty limitation would, via this idea, not be paid to these companies, but instead flow into a central pot “to the benefit of those [new artists] that need time to create a fan base”. The letter’s authors argue that this central pot would then “support the eco-system that makes the success of future stars possible”;
A “more determined approach to reduce fraud, money laundering and piracy on music services”, combined with ensuring that non-music audio content (like podcasts and audiobooks) on streaming services doesn’t “[take] a slice of music subscription revenues”.
Today’s letter isn’t the first comment from an independent music business power player to emerge in response to Universal and Deezer’s proposals.
On September 11, Denis Ladegaillerie, CEO of Believe – owner of TuneCore – issued a statement offering his early take on the ‘artist-centric’ model put forward by Deezer and UMG.
Ladegaillerie applauded the attempts of the model to quash the earnings potential of “non-music content and specific elements of functional music”, as well as Deezer’s anti-fraud efforts.
“We strongly oppose an unfair ‘reverse Robin Hood’ system that is centered around taking compensation from rising artists to allocate it to top and established artists.”
Denis Ladegaillerie, Believe, speaking earlier this month
However, he had much harsher words for the model effectively lowering the per-stream earnings of artists with fewer than 1,000 monthly listeners – and particularly, in Ladegaillerie’s words, “the risk that those [1,000 stream/500 listener] thresholds would be raised over time, affecting progressively more and more artists”.
Added Ladegaillerie: “We strongly oppose an unfair ‘reverse Robin Hood’ system that is centered around taking compensation from rising artists to allocate it to top and established artists.”
Last week, another leading voice in the global independent music sector stepped forward to offer his take on the Deezer x UMG “artist-centric” debate – with a rather different view of things.
Kenny Gates co-founded [PIAS] with Michel Lambot in Brussels in 1982, some 41 years ago.
Today, [PIAS] is home to a range of in-house labels – with artists such as Connie Constance, Editors, and Agnes Obel.
In addition, [PIAS] owns [Integral], which offers distribution/services to over 100 independent label clients around the world including ATO, Beggars Group, Bella Union, Chrysalis, Domino, Epitaph, LSO, Mute, Ninja Tune, Partisan, Secretly Group, Transgressive, and Warp.
“This to me clearly seems to signal support for music fans paying full attention to the music they love rather than simply having music in the background.”
Kenny Gates, [PIAS]
In a memo to staff issued last week – and obtained by MBW – Kenny Gates informed [PIAS]’s workforce that he was a fan of the attempt by the Deezer ‘artist-centric’ model to “give more emphasis to active listening”.
“This, to me, clearly seems to signal support for music fans paying full attention to the music they love rather than simply having music in the background of a bar, a shop or even a household,” wrote Gates.
“This should also address one of my biggest concerns for years – ‘stream farms’, where some abuse the system by automating by a computer [plays of] the same song to the threshold of payment of 31 seconds, 24 hours a day, seven days a week to generate more revenue for themselves and inflate statistics.”
At this point, we should mention an important fact: Universal Music Groupacquired a 49% stake in [PIAS] last year, though UMG doesn’t have control of the indie company nor have any seats on the [PIAS] board.
In his memo, Gates was open to critiquing the fact that the ‘artist-centric’ model put forward by Deezer and UMG would likely work in the major’s favor.
“Of course, us independents will always be suspicious about an initiative taken by a major rival, and surely UMG has – as any commercial company would – their interests in mind when agreeing this with Deezer,” wrote Gates.
“I fail to see what negatives, if any, this initiative might carry. For us as for the labels who invest every year, relentlessly, in new talent, this has to be good news.”
Kenny Gates, [PIAS]
He continued: “The proof will evidently be in the pudding. After a few months of this being in place, we will be able to gauge the plusses and minuses of this artist-centric model and I am sure it will not be perfect.
“But I fail to see what negatives, if any, this initiative might carry. For us as for the labels who invest every year, relentlessly, in new talent, this has to be good news.
“Because we champion quality over quantity.”
Gates suggested that according to [PIAS]’s own insights team, “[PIAS] and our artists, when joining this program, will be sharing [in] up to 7% to 9% more revenues” from Deezer than they see today.
The [PIAS] founder also expressed his outrage over the millions of dollars currently being generated by “noise” playlists that feature the sound of rain, white noise, birdsong, “relaxing sleep ambiance” and other non-music content.
“Before this initiative from Deezer, a stream of the sound of the rain falling was paid the same amount as beautiful songs such as Colors by Black Pumas, Caroline by Arlo Parks or Open Window by Warhaus to just name a few,” he wrote.
“Is that fair? I don’t Believe so.”
If you think that capital ‘B’ in ‘Believe’ was a grammatical mistake from Gates, you’d be incorrect – it was very deliberate.
“We champion quality over quantity. This might not be the case for the aggregators whose business model has been one of tonnage, chasing quantity rather than quality – and chasing a tail so long that the industry is now tripping over it.”
Kenny Gates, [PIAs]
At one point in his memo, Gates turned his full attention to rival Believe, and Denis Ladegaillerie’s contention that the Deezer x UMG model would “[take] compensation from rising artists to allocate it to top and established artists”.
Said Gates: “The propaganda from our friends at Believe doesn’t seem to add up. No [truly rising] artists will be paid any less, most will be rewarded with a bigger amount per stream, because they have an audience and have in all likelihood worked harder, engaged in socials, toured and been [seen] in the press or been listened on the radio”.
Gates reminded his team that [PIAS]’s credo of championing “quality over quantity” didn’t necessarily apply to every company working in the music market today.
“This might not be the case for the [DIY] aggregators whose business model has been one of tonnage, chasing quantity rather than quality – and chasing a tail so long that the industry is now tripping over it,” he wrote.
Gates added: “Trying new things, challenging the status quo and embracing change has always been at the heart and the culture of [PIAS].
“I can see one obvious winner of the artist-centric model and that is… music.”Music Business Worldwide
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