Universal Music Group lands new royalty model that boosts popular artists

Universal Music Group (UMG) announced a new streaming deal today with French music service Deezer that aims to direct more listener payouts toward professional artists. The changes will essentially count a single listen as two listens on popular tracks, giving them more revenue than smaller ones. Currently, platforms like Apple Music and Spotify (and Deezer) generally divide payments based on total listens, regardless of what the track is or who made it.

In the new deal, “professional artists,” from big stars like BTS and Billie Eilish to up-and-coming bands, will effectively see payout increases of 10 percent, the Financial Times reports. To qualify for the increased payouts, artists need a minimum of 1,000 streams per month by at least 500 separate users. The values can double again to the equivalent of four streams if users actively search for specific artists and tracks to play.

Deezer CEO Jeronimo Folgueira says that the deal is the “most ambitious change” to the economies of music streaming since it first started. “There is no other industry where all content is valued the same, and it should be obvious to everyone that the sound of rain or a washing machine is not as valuable as a song from your favorite artist,” Folgueira says in a press release.

Deezer will demonetize tracks detected as non-artist ambient noise, and the company is looking to replace them with a new in-house library of sounds. Deezer says it will not collect any royalties on the upcoming noise tracks.

According to the press release, UMG and Deezer’s “artist-centric” deal helps protect streaming royalties for artists by essentially disincentivizing amateur tracks and unauthorized uploads. Deezer says about 7 percent of streams in 2022 were detected as fraudulent by its systems, which identified fake accounts and payment fraud. Deezer will launch the new model this year in France in Q4 and will roll it out to other markets later.

In an email to The Verge, Folgueira shares that the deal might go beyond just UMG:

We have several other labels signing up to the new model as we speak, and therefore we expect to have more content providers on board by the time we start. Our intention is to have achieved a full rollout with all providers and countries in 2024.

The popularity of streaming music hasn’t entirely translated to deeper pockets at record companies. Goldman Sachs Research data published in July finds that streaming music consumption has increased 2.5 times since 2017, but revenue per stream has fallen 20 percent in the same timeframe.

Deezer and UMG will collaborate on adjusting the payout models over time, which could have a ripple effect on other streaming provider deals. SoundCloud is another music streaming service that’s toying with payouts as well with its “fan-powered royalties” model, which has Warner Music Group on board. That model divides each subscriber’s payments among the artists they actually listen to, rather than combining all subscription revenue into a single pool to be shared by every artist.