Is a new streaming royalty distribution model on the way? This report from U.K. analyst Mark Mulligan says that Deezer (which still has foothold in Europe) is in talks to change the way it distributes royalties to a service-centric licensing model, whereby subscription fees are divided among the artists individual fans listen to.
Currently, fees go into a big pot to then be divided by the total number of tracks streamed, awarding the most-streamed artists a large slice of the pie. That’s cool if you’re Drake, Ed Sheeran or Katy Perry, but not so cool if you’re niche metal band, explains Mulligan.
“Imagine a metal fan who only streams metal bands. If Katy Perry accounted for 10% of all streams in a month, the 10% of that metal fan’s subscription fee effectively goes towards Katy Perry and her label and publisher.”
What’s fairer, says Mulligan, is a model that pays royalties out as a percentage of a fan's subscription fee that's calculated according to who they individually listen to. Mulligan adds: “So if a listener listens 100% to Metallica, Metallica gets 100% of the royalty revenue generated by that subscriber.” Deezer has reportedly had ‘encouraging’ feedback from labels about the idea although the indies are skeptical due to the diverse listening habits of their acts' fans.
That model was broached a few years back by Tidal's then Chief Investment Officer, Vania Schlogel, amongst others. She suggested such a system would make music fans more likely to pay for a streaming subscription because they’d be directly supporting their favorite artists.
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