Indies Weigh In On Deezer/UMG Artist-Centric Model

Remember the recent debate stirred by the new 'artist-centric' streaming royalty model announced by Deezer and Universal Music Group? If you need a refresher, check out our earlier article, linked here. The model brings significant changes to the prevailing 'pro rata' royalty model, and four major heavyweights in the indie space have important opinions about it.

Yesterday, September 27th, Martin Mills from Beggars Group, Darius Van Arman from Secretly Group, Stephan Bourdoiseau from Wagram Stories, and Emmanuel de Buretel from Because Music issued a joint letter, linked here on Music Ally, sharing their perspectives on the 'artist-centric' model. In the letter, they express their support for certain aspects of the Universal/Deezer model, including the de-monetization of non-musical content, distinguishing between push and pull plays, and implementing anti-fraud measures. However, they are looking for the new model to reach farther in terms of how it supports independent and lesser-known artists. In their ideal version of the 'artist-centric' model, they propose additional elements:

1.  Implementing a small flat fee for each music upload to services like Spotify, charged to the distributor. This fee acknowledges the costs of uploading and storing tracks that don't directly benefit the service. (Though this might not be welcome news for DIY services uploading a large volume of tracks daily.)

2.  Introducing a taxation system for the wealthiest record companies, (like Universal), capping their earnings from streaming services. Any revenue generated beyond this royalty limit would be redirected into a central fund to support emerging artists and nurture the ecosystem that fosters future success. Sort of like the black box royalty system, but backwards! The system would be build to favor lesser-known artists, rather than taking their hard-earned money from them.

3.  Taking a more proactive stance against fraud, money laundering, and piracy on music platforms, while ensuring that non-music audio content (such as podcasts and audiobooks) doesn't divert music subscription revenues.

Yesterday's letter is not the only response from influential figures in the independent music industry regarding the proposals put forth by Universal and Deezer. On September 11, Denis Ladegaillerie, CEO of Believe (TuneCore's parent company), shared his initial perspective on the new model. Ladegaillerie commends the model's efforts to limit the earnings potential of non-musical content and specific functional aspects, as well as Deezer's commitment to combating fraud. In his own words, Denis states that, "we strongly oppose an unfair 'reverse Robinhood' system that takes compensation from up-and-coming artists and redistributes it to established artists." However, Ladegaillerie expresses strong criticism for the model's impact on artists with fewer than 1,000 monthly listeners, especially his concern that the thresholds of 1,000 streams and 500 listeners might be raised over time, affecting an increasing number of artists progressively.

Last week, another influential figure in the global independent music sector took a stance on this hot-button issue. Kenny Gates co-founded [PIAS] with Michel Lambot in Brussels way back in 1982. Today, [PIAS] hosts a range of in-house labels featuring notable artists such as Connie Constance, Editors, and Agnes Obel. [PIAS] also owns [Integral], a distribution/service company catering to over 100 independent label clients worldwide, including ATO, Beggars Group, Bella Union, Chrysalis, Domino, Epitaph, LSO, Mute, Ninja Tune, Partisan, Secretly Group, Transgressive, and Warp.

In a memo to [PIAS] staff last week, as obtained via Music Business Worldwide, Kenny Gates expressed his support for Deezer's attempt at an "artist-centric" model, valuing the importance of active listening. "To me, this clearly signals a focus on music fans genuinely paying attention to the music they love, rather than it being background noise in a bar, shop, or household," Gates wrote. "This should also address a longstanding concern of mine - 'stream farms' - where some abuse the system by artificially generating plays of the same song using computer automation. They play the song for just enough time to accumulate payment but repeat it endlessly, 24/7, purely to boost their revenue and statistics."

It’s important to note that Universal Music Group acquired a 49% stake in [PIAS] last year. However, UMG doesn't have control over the indie company nor hold any seats on the [PIAS] board. In his memo, Gates acknowledged that the 'artist-centric' model proposed by Deezer and UMG would likely favor major labels. He continued to say, "Only time will tell. After a few months of its implementation, we'll be able to assess the pros and cons of this artist-centric model, which I'm certain won't be flawless. However, I fail to see any potential drawbacks this initiative might bring. For us, and for the labels that tirelessly invest in new talent year after year, this has to be good news." Our fingers are crossed that Gates is right! Like he says, only time will tell with this one.

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