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Universal and Deezer’s alliance to find “potential new economic models for streaming” officially announced

By Chris Cooke | Published on Wednesday 15 March 2023

Universal Music and Deezer have officially announced their alliance to investigate “potential new economic models for music streaming that more fully recognise the value artists create”.

It means the major is now working with two of the smaller streaming services to research possible ways to evolve the current model employed by the digital platforms when it comes to sharing out revenue across the music community each month.

Universal boss man Lucian Grainge talked – somewhat vaguely – about the issues he has with that current model in a memo to staff at the start of the year.

Under the current model a streaming service allocates a portion of its advertising and subscription revenues to each track based on consumption share, and then shares that allocation with the record label or music distributor that provided the track, and the music publisher or collecting society that controls the accompanying song.

Some would argue that Universal is by far the biggest winner under the current model, but Grainge is nonetheless unhappy, with a particular grievance being that mood music and background noise – which gets plenty of repeat plays on the streaming platforms – is treated the same as good old fashioned pop music when it comes to allocating streaming monies to catalogue.

Not long after Grainge’s moany memo, Universal announced that it was working with Tidal to investigate and experiment with alternative approaches to sharing streaming income. Then, in an investor call at the start of this month, Grainge said that similar investigations and experiments were planned with the Deezer geezers.

That latter tie up was formally announced this morning. “Through this collaboration UMG and Deezer aim to develop new methods that holistically reward recording artists and songwriters for the value they create and to reimagine and update the engagement model for Deezer’s users and the artists they love”, an official statement declares.

Of course for years now Deezer has been keen to shift to a different model of allocating streaming monies to catalogue, the much talked about user-centric model. In 2021, Tidal also announced an interest in adopting the user-centric system.

However, the labels – although official agnostic on this – don’t really like the user-centric proposal, and with these new alliances Universal is seeking alternative alternative approaches.

“The new initiative between Deezer and UMG will seek to better align the interests of artists, fans and streaming services and explore ways in which artists at every point in their careers and from every genre and geography can more fully benefit commercially from streaming”, the official statement goes on.

“With a foundation in deep data analysis, the partnership will look at the benefits and evaluate the viability of different economic models aimed at driving subscriber growth”, it continues, “forging stronger bonds with music fans on the platform and developing commercial opportunities that benefit artists and the broader music community”.

Commenting on all this, top Deezer geezer Jeronimo Folgueira says: “As a key player in the music industry, we work with all labels to find ways to make the ecosystem fairer and help artists monetise their music better. The current system has clear issues that need to be addressed, such as increasing amounts of non-music tracks uploaded on platforms, poor quality covers with misspelt artists’ names and songs to ‘steal’ streams, and people trying to trick the system with the length of tracks”.

“This hurts true artists, makes it harder for new ones to emerge and also damages the fan experience”, he continues. “We believe in quality and fairness at Deezer and with this initiative together with UMG we will look into how we can improve the model to everyone’s benefit. Music is extremely undervalued today and as part of the artist-centric discussion we are keen to find additional ways of increasing monetisation, to the benefit of real artists, the labels and platforms like Deezer”.

Meanwhile, Universal’s top digital dude Michael Nash adds: “Deezer has long advocated for a re-evaluation of subscription’s economic model. We’re THRILLED Jeronimo and his team are partnering with us to explore how we can evolve streaming for the benefit of the entire ecosystem of artists, labels, platforms and fans”.

“Such collaboration is critical to the success of the artist-centric initiative”, he adds. “While there won’t be one uniform quick fix – subscriber acquisition and retention dynamics and metrics vary by platform – our partnership with Deezer will help accelerate this entire enterprise”.