IMPALA weighs in on Deezer-UMG streaming model

IMPALA weighs in on Deezer-UMG streaming model

Deezer and UMG unveiled their proposal to reform the streaming market through an “artist-centric” model last week.

The streaming company and DSP are testing the model, which seeks to change the way streaming royalties are allocated.

Now European indie labels body IMPALA has responded to the proposals.

While describing it as “encouraging” that certain aspects of the proposals from Deezer and UMG chime with IMPALA’s own 10-point plan to make the most of streaming, published in 2021, the trade body is seeking more clarity on the model.  

Deezer has said there will be a boost in royalties (based on doubling streaming volume) to artists who meet certain thresholds.

“The concerns raised include whether the proposal could lead to a possible two-tier approach impacting the work of independent labels who account for 80% of new releases… as well as label decisions on which services they choose to deal with,” said IMPALA. “The fact that the Deezer proposal has been developed in a vacuum with the market leader instead of the sector generally is also a concern. Unless other stakeholders agree, IMPALA doesn’t see how it could apply outside of UMG repertoire.”

“Deezer’s engagement on the fight against streaming fraud is welcome as that plagues the industry and diverts revenues away from artists and creators,” added the trade body in its statement. "Increasing the value of music and elevating diversity are core to IMPALA's streaming plan, and we appreciate that similar aims are shared by Deezer.”

Mark Kitcatt, co-owner and MD of Everlasting Popstock, chair of IMPALA’s streaming reform group, said: “IMPALA welcomes moves to propose reform in the market and IMPALA's plan also seeks to achieve elements of differentiation as well as combat streaming manipulation. Our plan aims to elevate diversity and make it more commercially attractive, as already discussed with various services. Our goal is to realise the untapped potential of the streaming market. IMPALA aims to explore this further with Deezer and indeed all digital services.”

If Deezer’s approach were to create a two-tier market that would have a negative impact on our members

Helen Smith

IMPALA’s executive chair Helen Smith said: “We appreciate Deezer’s commitment to improve the streaming market. It will be interesting to see the modelling and understand if this has been discussed with other stakeholders, as well as with regulators. The gap between bigger and less streamed artists should be addressed and our plan sets out a number of different ways to achieve that. If Deezer’s approach were to create a two-tier market that would have a negative impact on our members, that would not be good for diversity.”

IMPALA members have also flagged that some of the language in the press in reaction to Deezer’s proposal is “unfortunate”. The sector is concerned in particular with the use of the term "independent", which has been wrongly used to refer to bad actors trying to game the system.

Mark Kitcatt said: “It’s a common thread through the history of recorded music that the great artistic advances and changes have come from, and through, the independent sector. I don’t expect Goldman Sachs to know that but Deezer and UMG certainly do and we hope that services will join with us to reform the streaming world in a way that increases opportunity and reward for all dedicated music creators, and enhances and enriches the experience for fans, rather than just diverting more royalties towards the biggest artists.”

IMPALA’s Helen Smith concluded: “More debate is needed on this vital question and we look forward to further discussions to clarify the specifics of the Deezer proposal and its potential impact on the music ecosystem before commenting further. In the meantime, it can only apply to UMG repertoire unless or until other licensors were to agree, and we invite all interested parties to read IMPALA’s plan and let us have their views.”   

Commenting on Deezer and UMG’s ‘artist-centric’ model proposals, Silvia Montelllo, CEO of AIM, said: “AIM welcomes efforts to review the current streaming economics model. But whilst there are many positives to takeaway, including Deezer’s continued intention to combat streaming fraud, boosting royalties for artists who meet certain consumption thresholds could encourage a ‘two-tier system’ that would disadvantage those navigating the first steps of their careers or working within emerging genres. Considering these proposals were agreed without industry consultation, more collaboration and transparency around modelling is needed to ensure they work for rights-holders operating at all levels of the business.”  

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