News September 12, 2019

Deezer plans to pilot user-centric payments in 2020

Deezer plans to pilot user-centric payments in 2020

A month after TMN’s op-ed about the need for a user-centric payment system (UCPS), is planning a pilot scheme in early 2020 in France.

If it works, it will roll out globally.

Alexander Holland, its chief content and strategy officer said at a media briefing in Paris, “Streaming has been the main innovation driver in the music industry for many years now.

“Digital technologies and data make it easier than ever to make sure that all artists and content creations have a fair playing field.

“A user-centric approach is the next logical step and would mean that fans directly support the acts they love.

“Getting rid of bot fraud is a welcome added bonus and would make sure that your subscription money goes where it’s supposed to – the acts you love.”

Deezer has been pushing for UCPS since 2017 and held discussions with labels.

But in September 2019 it has upped the ante and actively pushing to get public and industry opinion onside.

This is through a new website which shows how UCPS is fairer than the current system, and a #MakeStreamingFair social media campaign to generate heat.

Premium subscribers can now compare what an artist gets currently, and what those royalties would be with UCPS.

Deezer’s arguments

Deezer’s argument is that artists getting a share of their plays is more equitable than “the existing ‘market share’ system used by streaming services, which gathers royalties into a central pool, then divides them and pays them out based on each artist’s share of overall streams from all listeners.”

It would also tackle fraud more efficiently, short-circuiting “fake streams” from not accounts, because UCPS would only distribute the revenues from that particular bot account.

It would also fix the imbalance caused by younger listeners and “intensive users”.

Deezer’s 2018 figures showed 18-25-year-olds represent 19% of all of its subscribers, but generated 24% of total royalties.

Those who stream over 100 artists per month account for just over 40% of users but generate nearly 70% of royalties.

“Important genres for people above 35 and 40 have their artists making less money than expected in the previous world, where each CD was sold, and the money was going artist by artist,” Holland stated.

“Just in France, UCPS is going to have the top stream artists make, maybe, 10% fewer revenues.

“On the other side, those who are making very weak revenues are going to be maybe making 30% more.

“We believe that this readjustment, which is tiny, can help a lot of artists who today are not getting any dime from the streaming business.”

Moving forward

At this stage, Deezer is only concerned with royalties for recordings, rather than for publishers and songwriters.

The company says 40 labels from around the world – “including the majority of French labels” – have signed on.

They include Because Music, Play Two, Idol, Believe Distribution Services, International Artist Organization of Music, MMF (Music Managers Forum) France and GAM.

But there are still some major omissions which have to be brought into the fold – and Deezer admits it is fighting to persuade enough French rights-holders and policymakers to agree to a scheme where major artists will get decreased royalties in favour of smaller niche acts.

“Some labels love it, some labels hate it, some labels change their minds and some labels have divisions within them,” Holland revealed.

“You talk to one person in a label in the morning, and they say, ‘Yeah, I think this is great’.

“You [talk to] another person in the afternoon and they say, ‘Hmm, I’m not so sure’.”

The French streamer says it has a “technical solution in place” and that putting the scheme in placer “does not require significant investment.”

At the end of 2018, Deezer had seven million subscribers and 14 million monthly active users.

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