User-centric licensing

UK hearing of Spotify, Apple and Amazon and major Music labels view!
I am sure you all know that Spotify, Apple and Amazon participated in the last UK parliamentarian hearing (DCMS Committee) on streaming economics on February 23rd 2021. What you probably missed is the major Music labels view on many important issues.
I have gotten many questions in regards to this hearing! Regardless of how much I want to answer each individually, there is just not enough time, hence this NewsFlash!

It is based upon the articles in Music Week and Music Business Worldwide:
Spotify
Horacio Gutierrez, head of global affairs and chief legal officer, Spotify.
We would definitely be open to looking at alternative models, said Gutierrez. In the case of the user-centric model, it is one that we are open to.
If musicians and artists, in general, prefer the model, we would support doing the initial research and moving into that.
Just keep in mind, a transition to a model like that would require not only a decision on the part of Spotify, he said. “Every licence agreement that we signed with every rights-holder all over the world would have to be transitioned into that model. So, it is not a trivial transition. But if people felt that it was a model that would be more equitable and more beneficial, we would absolutely be open-minded about it.”
Apple music.
Elena Segal, global senior director of music publishing at Apple.
We want creators to be able to create, we’ve always said that music is in our DNA, and we really mean it.
When Green asked if Apple’s finances were really that delicate, Segal stressed that it’s a “narrow margin business” and “we already pay more than other services” (Thor’s remark: Apple Music pays about £0.0059 per stream (0.59 pence), while Spotify pays up to £0.0038 and YouTube pays just £0.00052).
Amazon music
Paul Firth Amazon’s director of international music.
Firth suggested everyone in the industry needs to consider whether alternative royalty payment models such as user-centric were fairer for artists.
“It’s time that we did look at how other models might work,” he said.

The other DSP execs almost got on board with the Amazon proposal, although Spotify’s Gutierrez stressed that it “has to be a model that works at scale”.
NIMs ecosystem makes the transition easy, scales effortlessly, makes the financial margins better and supports fully User-centric licensing, so no excuse!
The major music labels.
The UK arms of the major record companies – the Parliamentary Committee asks the majors: ‘Can you clarify whether your companies support user-centric payment systems, and if not, what alternative payment systems were being alluded to?

Universal Music
“The issue of fair compensation for all music creators is essential to our mutual success, so we take the discussion around streaming’s payment model very seriously.”Music’s rapid change offers the opportunity to optimise models for sustainable and mutually beneficial success if approached properly. We are committed to getting it right.
“We welcome any proposal that maximises fairness and transparency and supports market growth.”

Warner Music
“We have explored the concept of a user-centric model. It is always our goal to ensure that any business model implemented is reliable, fair, transparent and underpinned by accurate data for artists and rights-holders. “A user-centric model would not change the overall royalty pool, and our analysis suggests that any changes in the allocation of payments to artists would not be significant.
“A user-centric model would be far more complex and administratively burdensome for digital services to implement as it would require a tremendous amount of data – it is likely that digital services would want to pass off some of the associated costs to rights-holders and therefore to artists.”

Sony Music
“We are agnostic as to whether a user-centric model is employed as it is not meant to change the pool of money available to the labels/artists. We feel that whether a user-centric model is used is ultimately a matter for the DSPs (who will have to invest significant sums in changing royalty reporting systems) and the artist community (as some artists will win from a changing model and some will lose).
“However, due to the practical implications of such change for various stakeholders, we think it would require thorough and concerted impact assessments in order to establish industry-wide support. It is extremely important to understand that a shift in reporting methodology will not increase the number of money artists is paid in the aggregate.

NIMs answer to the labels.

Universal: No problem – NIM can do that

Warner: User-centric or service-centric are both based on the same NIM technology platform. There will be no extra complexity or administration for the DSPs. In fact, we have calculated (roughly) that Spotify can save some €15 million using our system in reporting staff alone.

Sony Music: There will be no extra cost for the DSPs. It is correct that some artist (music labels) will be better off than others as they will get paid for each of their own songs that are played. However, the creators (songwriters/composers) will always be better off no matter licensing service with NIMs ecosystem.

NIMs ecosystem will be able to implement it reasonably easy and more importantly, NIMs ecosystem will favour the creators (songwriters).

Let us look at the facts!
An individual artist’s chance of generating over $100,000 on Spotify this year is… 0.094%. Breaking into the hallowed “1%” is a struggle that artists have long accepted as part and parcel of becoming a star—but breaking into the 10% of the 1%? In a world of 60,000 daily track uploads, those are the crazily steep odds facing any artist with dreams of making bank on Spotify in 2021.
Over the last four years, the number of recording artists whose catalogues generated more than €1 million a slightly more than 800 artists and generating more than €100,000 a year is some 7,500, that means an individual artist’s chance of generating over €100,000 on Spotify this year is… 0.094%.

However, that number decreases if you are a songwriter with some success. The challenge is that the songwriters do not get close to the €100 000 a year; in fact, it’s probably more like €100 000 and €10 000.

NIMs mission is to change that!

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