Deezer’s revised model for allocating royalties, which went into effect for recordings in 2023, is now being applied for songwriters too in France. Because French collecting society SACEM has signed up to what Deezer continues to call its ‘artist-centric payment system’. Which all sounds very nice in practice, but as with many reforms to streaming, the reality may be somewhat less rosy.
That ‘artist-centric’ system - which was cooked up with Universal Music based on big dog Lucian’s Grainge’s definition of ‘artist-centric’ - introduced various rules to stop functional audio leeching royalties, and offers ‘upweighted’ royalty allocation to tracks that meet certain criteria.
In particular, for tracks selected by a user - rather than driven by algorithmic recommendation - streams are double-weighted, meaning each stream counts as two streams from a royalty allocation point of view. Similarly, any track released by an artist who breaks through the threshold of at least 1000 streams from at least 500 unique Deezer users in any one month, is also double-weighted.
It’s those thresholds that were most controversial when Deezer first rolled out this system. One argument in favour trotted out at the time says that artists who work harder on fan engagement are rewarded. However, for songwriters that doesn’t necessarily apply because, unless the songwriter is also the recording artist, they may have little or no control over activity that could drive fan engagement with recordings of their songs.
For example, a songwriter may have passed - by proxy, via the artists recording their songs and those recordings get lots of streams - the thresholds across all of the songs they have written, but if one of their songs is then covered by an artist who has not passed the threshold, the songwriter would not be eligible for upweighted royalties on streams generated by the cover.
Nevertheless, SACEM CEO Cécile Rap-Veber says that Deezer’s ‘artist-centric’ system is a positive step towards a “more equitable distribution of revenue”, achieved “by rewarding true music, excluding noise, and better accounting for the diversity of aesthetics and genres listened to on the platform”.
Deezer CEO Alexis Lanternier says that he’s “THRILLED” to partner with SACEM on extending the ‘artist-centric’ system to songs and music publishing. “Our model ensures that a higher share of what subscribers pay goes to the artists they love”, he adds. “Through this partnership, we are pleased to offer these key benefits to songwriters, composers and publishers represented by SACEM”.
An outline of how the ‘artist-centric’ system works included with the SACEM announcement leads with the element that got least attention when it was first unveiled on the recordings side: the fact that there is a monthly cap on how many plays any one Deezer subscriber can account for in total, and when a Deezer user blasts through that cap, each of their streams will only count as a fraction of a stream. That applies at a user account level, not an artist or track level.
While the exact number of streams that take place before a cap is applied is not public information, if the cap is 1000 streams and a user has streamed a track 2000 times in one month, each play generated by that user’s account would count as only half a play when Deezer is allocating money to each track; if a user’s account generated 5000 streams, each stream would count as 20% of a play, and so on.
This ‘streams per user cap’ is a watered down version of the different user-centric royalty allocation system that Deezer previously championed.
Capping the number of streams one user can drive - before applying a royalty drop-off - could, it has been argued, help combat at least one type of streaming fraud, where botted accounts stream the same tracks - or groups of tracks - over and over again. However, depending on the artist, it could also penalise superfans who play their music on heavy rotation.
Around the same time Deezer rejigged its royalty allocation model to suit Lucian Grainge’s worldview, Spotify also implemented new rules. While Deezer’s thresholds only disadvantaged smaller artists who didn’t hit the threshold and so weren’t eligible for upweighted royalty allocation, Spotify’s rules stopped a significant number of smaller artists from getting any payment at all for streams of their tracks.
Both systems have been criticised by some in the music creator community, and tagged as a ‘reverse Robin Hood’ designed to funnel more money to superstars and big catalogue owners, and especially Universal Music. Those critics will presumably be equally skeptical of Deezer extending the artist-centric model to song royalties.
Many smaller artists may actually be missing out on song royalties already, because - unlike with recording royalties, which automatically flow through an artist’s label or, more likely for smaller artists, their distributor - someone needs to actively claim and collect song royalties from each streaming service each month.
If an artist doesn’t have a music publisher - or publishing admin service - and hasn’t joined a collecting society, no one is collecting that money on their behalf.
Even if the artist is a member of a collecting society a certain number of streams are required until the industry bothers to work out what song is contained in a track. If a track doesn’t meet that threshold, it won’t be matched to a song and the writer won’t get paid.
In both those scenarios, the unallocated money flows to the rest of the industry through the so-called ‘black box’ allocation, a controversial mechanism where royalties that can’t be attributed to a particular song are divvied up, usually based on market share.
Given smaller DIY artists recording and releasing music through DIY distributors may already be missing out on song royalties, the negative impact of the ‘artist-centric’ thresholds now being applied to those royalties is possibly less significant.
However, as previously noted, applying the thresholds to song royalties can also impact on more established songwriters whose songs get lots of streams in total, if one of their songs is covered by a DIY artist that doesn’t meet the threshold. Because it’s the artist that records the track that needs to pass the threshold for the ‘upweighted’ royalty allocation to apply, not the writer of the song.
Although, even then - given the payments generated by a single stream are already tiny and, by definition, those tracks aren’t played much - the actual dip in payments is probably very modest, unless there are a significant number of covers of any one song.
However, there are songs that - according to MLC data - have dozens or even hundreds of covers, meaning songwriters could be losing out. Quite what the scale of that disadvantage could be is something that only Deezer and its partners will know.
Nevertheless, it illustrates that - while reforms of the system for calculating and paying out streaming royalties may well be required - such reforms will always result in winners and losers.
With the winners more often the major labels, and in particular Universal Music, and the losers usually individual music creators and the wider music creator community - which is rarely consulted about changes - it’s hard to argue that reforms like this are wholly fair, no matter what problems they seek to address.