Lior Tibon, ex-TIDAL COO and founder of music fintech firm Duetti, has spoken to Headliner about Universal Music Group and Deezer’s recently announced artist-centric streaming model and what it really means for creators.
Announced in September, UMG and Deezer’s new artist-centric streaming model is set to launch in Q4 2023. The two companies said that the collaboration is driven by their ‘recognition that the current music streaming model needs to be re-imagined’. They also cite the ‘flood of uploads with no meaningful engagement, including non-artist noise content’ as key reasons for the reassessment platforms, labels, and artists need take to foster a thriving music ecosystem.
As such, Deezer will attribute a double boost to what they define as “professional artists” – those who have a minimum of 1,000 streams per month by a minimum of 500 unique listeners – in order to more fairly reward them for the quality and engagement they bring to the platforms and fans.
The platform will also reward engaging content by additionally assigning a double boost for songs that fans actively engage with, reducing the economic influence of algorithmic programming. Furthermore, it will be demonetizing non-artist noise audio as it promises to replace non-artist noise content with its own content in the functional music space - this won’t be included in the royalty pool.
In addition, Deezer has pledged to tackle fraud by continuing to drive an updated, and stricter, proprietary fraud detection system, removing incentives for ‘bad actors’, and protecting streaming royalties for artists.
However, according to Tibon, while the announcement marks a ‘step in the right direction’, its implications for artists will vary significantly depending on the stage they are at in their career.
Here, Tibon tells Headliner about his career so far and why when it comes to such streaming models ‘the devil is in the detail’.
How did you initially become involved with TIDAL?
In January 2015, I joined the core team that launched TIDAL under the ownership of Shawn ‘JAY-Z’ Carter and its original artist owners. Over the next seven years, my role at TIDAL evolved to encompass significant responsibilities, including leading key strategic, revenue, and operational initiatives. During this time, I had the privilege of witnessing the music industry's remarkable growth and transformation, largely driven by the widespread adoption of streaming. In 2021, when TIDAL was acquired by Block/Square, I took on the responsibility of leading the sale process from TIDAL's side and remained with the company for a year after the acquisition, actively contributing to the integration efforts.
What were some of the biggest lessons you took from your time at TIDAL?
Jumping from investment banking straight into the music industry, I had a steep learning curve in understanding how to work with music talent, standing at the intersection between the business and the financial side (on the one hand) - and the creative side (on the other). This was particularly important at TIDAL, as the company was founded and owned by artists.
Another key insight I gained pertained to the slower response of some traditional industry gatekeepers to technological changes and shifting consumption patterns. This observation served as a driving force behind the founding of Duetti, motivating me to establish a more adaptable and responsive approach to address the evolving dynamics of the music industry.
Talk us through the backstory of Duetti. What inspired you to launch the company, and what is its mission?
Duetti was started in order to democratize opportunities of catalogue monetisation to a broad group of artists - not just to A-listers. We believe that by using transparent and sophisticated data analysis and methodologies, we are able to offer clear and fair pricing for catalog tracks, providing many artists with additional financial options which previously were not available to them.
Critically, we are not only a financial vehicle, but we are investing heavily in making sure any song that we are involved with is appropriately presented and marketed to relevant audiences. We have developed sophisticated techniques to ensure the music is being heard - we view ourselves as ‘custodian’ of catalogue, with special expertise in digital distribution.
What did you make of the UMG and Deezer announcement of their new artist-centric model? Could it have a meaningful impact on the careers of creators?
The UMG and Deezer announcement regarding their new artist-centric model is undeniably a positive step in addressing the long-standing distortions within the antiquated streaming payout system, which has remained virtually unchanged for the past 15 years. The announcement carries the right tone and intentions, signalling a shift toward fairer compensation for creators. However, there are notable concerns stemming from the lack of crucial details in the proposal, raising valid questions for independent artists and their supporters.
Rather than simplifying the royalty system, the announcement introduces complexities that could facilitate non-transparent manoeuvres. While it's evident that music from mega stars, particularly those owned by UMG and the major labels, stands to benefit, the real-life impact on smaller independent artists, who form the fastest growing and most vibrant segment of the music industry, remains uncertain. The devil is indeed in the details when assessing whether this new model will genuinely empower and benefit these independent creators.
Are there any specific segments of the music industry that it could have a more profound impact on?
One thing is clear - that music of megastars will benefit from the UMG/Deezer proposal. In fact, the artists themselves most likely won’t benefit directly - if they have unrecouped advances, which many of them do, the labels will, and perhaps that’s why we haven’t seen any direct public artist comments here. A lot of details are missing in order to properly assess the impact on the independent artist sector - and that is a concern. I led the implementation of the short experiment of “user centric royalties” (which is a different royalty payout model) in TIDAL, and I can attest first hand that even small tweaks to the rules of the system can have significant impact on the outcome.
Would you expect to see other platforms/labels launch similar initiatives?
My assumption is that the larger platforms and many labels will wait to see how the UMG/Deezer plays out - both in terms of its actual impact on the royalty payout, as well as in terms of broader industry perceptions.
If this model were to be adopted by larger streaming platforms, it's uncertain how its principle will be adapted - for example, whether the same absolute numbers would apply or if adjustments would be made based on platform size.
What is the exact ‘cut off’ threshold to define professional artists?
The exact definition of “professional artists” is not clear and can has already created a lot of confusion - an arbitrary cut-off (1,000 streams a month and 500 unique listeners on Deezer) was announced - smaller independent artists do not have full visibility here and may not know whether they are defined as "pro" or not (and therefore whether they benefit from an additional payout "bonus"). A few specific examples: are these cut-off thresholds only for France (which is the first territory to implement the experiment) or across the Deezer platform overall? Are the streams royalty bearing or all streams? This may require indie artists to pay close attention to their specific audiences in smaller platforms to make sure they satisfy the threshold - this may be good for platforms such as Deezer, but very challenging to manage for independent artists who are stretched thin and not able to devote as much attention to all streaming platforms equally.
What are the exact mechanics of ‘searchable streams’ for the additional bonus and how do they work in practice?
If a user is looking for Taylor Swift and then plays her music from her artist page - does this count? Or only if the play is directly from the drop-down search menu? Would all plays in session count or only the first one? Would searches within the user's own library count? These all seem to be highly tactical questions - but they add up and can create huge swings in the overall results of this model. Will UMG and Deezer provide additional information here so artists and their team know how to tailor their marketing efforts in an ROI driven way? How would this additional bonus work in practice? Will there be any disclosure, and clear comparison between the current model and the proposed one, so everyone can transparently assess the impact?
What level of transparency will be provided to artists in calculating their royalty rates?
The current method is confusing as it is and the addition of these proposed bonuses and breaking up the "all streams are equal" principle create more - not less - confusion and opaqueness in the system. Transparency in calculating royalty rates, especially with the introduction of bonuses and deviations from the "all streams are equal" principle, remains a concern. Artists need clear flags to determine if they qualify as "professional" and which streams receive additional bonuses. There's a lack of clarity on transparency commitments for independent artists and educational efforts. Implementing these changes poses challenges for certain digital platforms, potentially leading to errors. Clarity and transparency in the royalty calculation process are crucial aspects that require further attention in the proposed model.
What needs to happen for this initiative to succeed?
The appropriate next steps here is to address the key outstanding open questions and provide a lot more transparency and education to the independent music community of some of these potentially significant changes. Duetti will be closely watching and alerting any adverse changes to the independent music community.