Universal Music and Deezer have struck a music streaming deal to create a royalty model designed to hand greater rewards to popular artists.
The label’s artists will now be paid more if fans actively seek out their music, rather than because a track auto-plays on the streaming app.
The model is designed to reduce the streaming income that goes towards amateurs, artificial intelligence bots and white noise soundtracks, meaning big names such as the singer Harry Styles will receive more than “a recording of a washing machine”.
The model aims to prioritise professional musicians – those who have a minimum of 1,000 streams a month and more than 500 unique listeners – who will receive larger royalty payments than “non-professional” artists.
The deal is expected to lift payouts to professional artists by 10%. The model will also double the weight of the streams if a listener actively seeks out a song or a musician. For example, if a user searches for an artist by name on the Deezer App and listens to their song, it will be counted as four streams for royalty calculations.
The level of royalties paid to musicians has been hotly debated since streaming breathed life into an industry that was on its knees as CD sales collapsed and piracy spread.
Deezer, which has 16 million monthly active users, competes with the likes of Apple Music, YouTube Music, Amazon Music and Spotify, the streaming company that became the most recognised specialist in the industry after launching in 2008.
At present, the structure of streaming deals means that subscription fees are put into a royalty pot that is divided among copyright holders based on their share of listening. Artists who created a song would not necessarily get paid more than anyone else who is a copyright-holder.
The existing structure does not adjust royalty fees depending on whether a song is searched for or automatically played via an algorithm. Instead, if someone listens to a song for more than 30 seconds, it counts as a stream.
“This is a massive change in the way the music industry will work … It is fundamentally wrong that 30 seconds of a recording of a washing machine gets paid the same as the latest single by Harry Styles,” Deezer’s chief executive, Jeronimo Folgueira, told the Financial Times.
Deezer will launch the model in France in October, and there are plans for it to be expanded to other countries from 2024.
Universal, whose artists include Taylor Swift and the Rolling Stones, is in discussions with rival streaming platforms – including Spotify, Tidal and SoundCloud – on changing how they pay royalties.
David Turner, founder of Penny Fractions, a music business newsletter and an expert on the business of music streaming, said: “The current pro-rata model is so broken that almost anything that steps away from that and prioritises active music listening may in the end be better for artists.
“The fact that this deal was done between UMG, the world’s biggest record label, and Deezer, without the input of working musicians, should temper any excitement. Still, this shows the music industry is capable of finding ways to better compensate artists when people are ready to sit at the table.”
Last year, the UK competition watchdog ruled that the world’s biggest record labels and streaming services were not making excessive profits at the expense of artists, concluding a long-running investigation.