UMG and Deezer Outline New Streaming Model to Cut Through Noise

Deezer plans to implement a new streaming model with Universal Music Group later this year — a step that Deezer CEO Jeronimo Folgueira called “the most ambitious change to the economic model since the creation of music streaming and a change that will support the creation of high-quality content in the years to come.”

In an announcement on Wednesday (September 6), Deezer said it would roll out this “artist-centric” system in the French market starting in the fourth quarter of 2023. The new model aims to reward artists and songs that are driving listener engagement while also de-prioritizing white noise and other “functional” audio. “The sound of rain or a washing machine is not as valuable as a song from your favorite artist streamed in HiFi,” Folgueira declared.

As part of the new model, plays racked up by “professional artists” — which Deezer defines as acts with more than 1,000 streams per month spread across 500 unique listeners — enjoy a “double boost.” (The announcement did not define what that “double boost” entails, though it noted that only around 2% of uploaders that have more than 1,000 monthly unique listeners.) Deezer’s analysis found that “artists listened to by new subscribers in their first month may drive as much as 25% to 30% of a user’s streams over the first two years;” the service aims to elevate these acts that appear to play a role in attracting and retaining subscribers.

Similarly, songs that are actively driving listener engagement will get the “double boost” as well. While the metrics for measuring engagement weren’t defined, Deezer’s data indicates that a huge swath of the audio on the platform is barely ever played. 97% of all uploaders generated just 2% of total streams.

In addition, Deezer plans to replace “non-artist noise content” — the sounds of whales or washing machines, for example — with its own functional music, while also excluding this audio from the royalty pool. That means that payouts to raindrop recordings and the like, which Deezer said count for roughly 2% of all streams, don’t come at the expense of payouts to singer-songwriters. “We are now embracing a necessary change, to better reflect the value of each piece of content and eliminate all wrong incentives,” Folgueira said in a statement. “There is no other industry where all content is valued the same.”

“With this multi-faceted approach, music by artists that attracts and engages fans will receive weighting that better recognizes its value, and the fraud and gaming, which serves only to deprive artists their due compensation, will be aggressively addressed,” added Michael Nash, UMG’s evp and chief digital officer. He also noted that the model may change in the future: “As the ever-evolving music landscape continues its rapid transformation, UMG and Deezer will rigorously address the impact of these changes as we incorporate new insights from data analysis and fine-tune the model, as appropriate.”

Deezer did not share any information about how the new model would change payouts for UMG artists.

UMG’s quest for a new streaming ecosystem has been a major talking point for the company since January. That month, in a letter to staff, UMG chairman/CEO Lucian Grainge called for the development of “a model that will be a win for artists, fans, and labels alike, and, at the same time, also enhances the value proposition of the [streaming] platforms themselves, accelerating subscriber growth, and better monetizing fandom.”

Since then, UMG announced partnerships with both Tidal and Deezer to try to determine what that model might look like. Streamers can do “a better job of monetizing these high integrity, high intense artist-fan relationships,” Nash told financial analysts in March. “We’ve been speaking with platforms… about the enhancement of offers to the consumer that reflect the engagement with artists that are really driving the economic models of the platform.” 

Spotify CEO Daniel Ek, however, appeared less enthusiastic about implementing a major change to the streaming model during an earnings call in July. “Most studies we’ve done on this [show] that even if you change it to a user-centric or an artist-centric approach, it seldom leads to these gigantic differences that most people perceive it to do,” he said.

“But we’re always open to hearing how we can make the system [fairer] to more artists,” he added.