Andy Malt 0:01
Setlist the music business podcast from CMU. This week: Is Deezer’s new streaming model really artist-centric. Welcome to setlist the music business podcast from CMU. I'm Andy Malt, with me is Chris Cook. Hello, Chris.

Chris Cooke 0:20
Hello there.

Andy Malt 0:22
As ever, we're going to take a look back at some of the biggest and most interesting music industry news stories of the last week or week when a jazz act won the Mercury Prize.

Chris Cooke 0:33
Yeah, the current iteration of the Mercury Prize judging panel clearly didn't get the memo. Yeah, the jazz act - however good they may be - the jazz act are just there to tick a box and not to take the prize.

Andy Malt 0:46
No, no, it's the first time in 31 years, the entire 31 years of the Mercury Prize, the jazz act has ever won the Mercury Prize. So that's that run broken, it's ruined. You can no longer joke about the token jazz act in the Mercury Prize. Because the jazz act won it. Rightly - it’s a good album. It's great album. And so well done to them. I don't think anyone tipped them to win. I certainly didn't.

Chris Cooke 1:18
Yeah, I guess moving forward the Mercury Prize sort of cliche, rather than talking about the token jazz act, we'll just have to revert to talking about the non token metal act that don't even get on the shortlist.

Andy Malt 1:31
No, no, they don't. And also, they seem to drop the folk act in recent years. It used to be a jazz act and a folk act, and then the acts who would actually win. But it's just jazz now. No metal. And yeah, Ezra Collective won it, and they give a really good speech. They deserved the £20,000 just for the speech, which was very good.

Chris Cooke 1:53
But we should stress we're not suggesting they were given the award, just in the hope they will deliver a good speech. They also, as it happened, delivered a good album. So I think everybody is happy with that as a collective Mercury Prize winner. Not the only thing that happened last week, which is just as well, because you know, we couldn't feel 30 minutes talking about that. Well, maybe you could. I don't have any more to say than we've already said.

Andy Malt 2:16
I think we've covered the main points.

Chris Cooke 2:19
The other thing that happened last week, which we're not actually here to talk about, because it would be a little bit self indulgent, and we're famously un-self-indulgent on Setlist. When have we ever been self indulgent on this podcast?

Andy Malt 2:33
Is having a podcast not self indulgent?

Chris Cooke 2:37
It is a bit self indulgent in a way. But we're not here to diss ourselves. We're here to big ourselves up. Yeah. Because last week, CMU new new logo, new look, new colours, new website, new everything really. Same old podcast. I was thinking that maybe given the new look, we should have come to this podcast with new voices, new accents. Or maybe we're in an era where you could put that in in post. Surely there's an AI now that could change our voices to be in sync with the new look. Or maybe, well, I guess our written voice hasn't changed, even though the CMU Daily looks different, and the website looks different. So maybe our actual voices can stay the same as well here on the podcast. But if you'd like us to change our voices, we always respond to feedback, do drop us a line and let us know. And we'll see if we can either employ some AI technology or maybe just me and Andy Malt, you know, maybe it's about time that we both adopted a different voice.

Andy Malt 3:36
I considered it briefly. But I'm not going to. I'm going to stick with not offending anyone with my ropey accents.

Chris Cooke 3:50
I think there are at least five accents you can still do without offending anybody. But let's not get into that because the point here is although the Mercury Prize and Ezra Collective, the jazz act, winning it - that's really exciting. The all new look, CMU - that’s really exciting. But actually, neither of those things are what we're here to talk about on this week's Setlist.

Andy Malt 4:13
No later on, we'll be discussing claims that organised criminals are using streaming services to launder money. But first Deezer has announced that it is making changes to the way it allocates revenues to tracks later this year. Based on its recent work with Universal Music, reviewing the way the streaming business works, those changes Deezer and universal say will result in the streaming service employing an artist-centric model, something universal boss Lucien Grange has been banging on about ever since the start of the year. The new system will see Deezer favour professional artists their term and tracks actively selected by users so that more money flows to them than the hobbyist artists and music pushed to uses by an algorithm Deezer will also replace all of the white noise and birdsong that has been pushed onto its platform with its own functional audio, that won't pull any money out of the royalty pool.

Chris Cooke 5:12
Yeah, so that's all fun, isn't it. But before we delve into all of that too much, and try to figure out what the hell a professional artist is, let me first provide you the customary background information. regular listeners, you know this, but there's a chance we've got a new listener. And if you're a new listener, the next 48 seconds off for you. Because let me explain music streaming is a revenue share, based on consumption share business. What that means is each month each streaming service allocates a portion of its revenues in each market to each track that is on the platform. And then once it's done that it then shares each tracks allocation with whichever labels and distributors provided the track. And whichever music publishers and collecting societies control the song copyright that is in the recording. Under the current system, that initial track allocation process basically asks a really simple question, which is for each track, what percentage of total listening did is accounted for in any one market and free and premium are calculated separately. And once we've identified what percentage of total listening that track accounted for, well, that is the percentage of the money it is allocated, so that the allocation can be shared with the label, distributor, publisher, society, and so on. And crucially, under the current system, all tracks are treated equally as part of that process, oblivious of who made them oblivious of who delivered them to the streaming service, and functional audio. So that's the white noise and the birdsong and other things like that has to date been treated no differently than pop music. Now, as regular listeners will know, lots of issues have been raised about this track allocation process over the years, although mainly by artists and songwriters, and the independent music community. But despite lots of issues being raised until now, huh, SoundCloud added a little bit of user centric for some of the content. But other than that, up until now, despite all of the debate about the issues with the current model, nothing has actually changed.

Andy Malt 7:21
But then at the start of the year, in a memo to Universal Music staff, Lucien Grange declared that it was now clear to him that and I quote, the economic model for streaming needs to evolve. As technology advances and platforms evolve, it's not surprising that there's also a need for business model innovation to keep pace with change. Therefore, Grange declared that the current system should be replaced with an artist-centric model. Quite what that meant wasn't clear at the time, although it was clear that the universal boss was particularly pissed off about all the functional audio being treated the same as the music released by his labels. Others speculated that there was also a concern at the major about all the music being pushed into the system by hobbyist musicians, which is also treated the same as tracks by established artists.

Chris Cooke 8:09
Now after Grainge ranted about all that, in his memo, Universal Music, then put out a couple of statements announcing that they had formed alliances with both Tidal and Deezer. And through those alliances, the major and the two streaming services, were going to investigate and research what this artists centric model for streaming might look like. Meanwhile, senior executives at Sony Music and Warner Music, Rob Stringer, the boss of Sony, Robert Kincl, top man at Warner Music, they also started to express similar concerns about the current system, particularly about things like functional audio, and the huge amount of music that is now in the system. And they made those statements particularly when they were talking to their investors, but in some other places as well. So we knew this work was going on behind the scenes with Deezer. And although as we've already said, we didn't really know exactly what the priorities were we could infer, and there was some speculation, but we didn't know exactly what the proposals were going to be. We just have this slightly generic, some might say, well, we'll come back to that maybe misleading term of the artists centric model. But last week, we got a press release through from Deezer that announced the changes they are going to make initially in France later this year based on the research that they have done. And so we now know what the so called artist-centric model looks like. And there were a number of changes that are going to happen as a result of all of that work.

Andy Malt 9:41
So what are those changes? Well, first Deezer will attribute a double boost to what that's its term there a double boost to what it defines as professional artists, which are, here's the quote, Those who have a minimum of 1000 streams per month and a minimum of 500 unique listeners all in order to more fairly reward them for the quality and engagement they bring to the platform, and fans. Secondly, Deezer will also assign a double boost for songs that fans actively engaged with reducing the economic influence of algorithmic programming. And finally, Deezer is planning to replace non artists noise content, that's its term there with its own content in the functional music space. And this won't be included in the royalty pool. And beyond that, there are also further commitment from Deezer to crack down on stream manipulation and fraud.

Chris Cooke 10:39
Yeah, so those were the big statements made by Deezer last week, we're coming back to streaming fraud and stream manipulation. So let's not dwell too much on that. This idea of the double boost. What the hell does that mean? I did ask for clarity. And I didn't really get it, I must admit, but I guess the crucial point is, when Deezer talks about there being a double boost, it doesn't mean that Deezer is going to be paying over twice as much money to the music industry. It means all of the money that is being allocated to tracks, more of it is going to go to professional artists content and to the songs where people have actually actively engaged with them, which means less money is going to go to non-professional artists and to the tracks pushed by the algorithm. Now, artist-centric is the term that Lucien Grainge started using earlier this year. And it's the term that Deezer has embraced. Now, here's an exciting bit for you here on Setlist, we have managed to arrange I don't know how we manage this, we have managed to arrange interviews with every single artist, every single artist who has been consulted about the artist centric model. So we'll we'll just put them all back to back. We'll get Andy to edit them. We know we will speed through this quite quickly. So here are our interviews with every artists consulted about the artist-centric model. [pause] So that's all of the artists who were consulted about the artist-centric model.

Andy Malt 12:10
Yeah, I didn't just forget to insert the audio there. There was no audio. That's the joke. It’s not good to explain your jokes. But there were no artists consulted.

Chris Cooke 12:24
Now, I should stress, that is slightly speculation on my part, although both Universal and Deezer have been very ambiguous about the artists that they've spoken to in that they've just said things like, Oh, we talk to artists all the time. And I mean, clearly, if there are actual artists being involved in this consultation, they will be naming them. I mean, a couple of weeks ago, when universal announced it was getting involved in YouTube's music AI incubator, and artists are going to be involved in shaping how music AI is going to work on YouTube, they named the artists who are going to be actively involved in that no artists have been named in this. And I'm almost almost arrogant enough to say that if artists and managers in the UK had been actively consulted on this, I'm pretty certain I would know about that. And I don't know about that.

So yeah, this seems to be an artist centric model that has been developed well, by non-artists. And yeah, interesting choice of words, definitely a Universal Music centric model. That is an uncontroversial statement. But is it artist-centric? Now, I should stress that I think that most artists and songwriters and producers and their managers probably are in agreement with universal and Sony and Warner and Deezer, about the white noise. And the birdsong, which Deezer recommends is accounting for about 2% of total streams, which means about 2% of the royalty pool has been allocated to that audio. And I think a lot of artists will probably agree yeah, that should never really have been part of the central system. That's probably a good development.

Of course, they haven't really defined what they mean by functional audio, because that's the content that people generally used to just have on in the background or to help them relax or sleep. But you know, what else people use to relax and sleep, that sort of ambient chill out music, which you could say is functional audio, but it's also music. So how are they defining that content? Who knows? But I think in the main artists would probably support that. And I think artists would probably like the idea of tracks where the fan actually seeks them out being prioritised in terms of payment over stuff that's pushed to people by an algorithm, because I think most artists are generally of the opinion that the algorithms, if anything, tend to favour the major labels and the big artists, so maybe that's a good thing. But I do think that this distinction between official artists and non professional artists. Well, that's potentially more divisive, isn't it?

Now, okay, you could say, well, the threshold is 1000 streams and 500 unique listeners. That's not that big a threshold. So maybe that's fair enough to say, well, I don't know. Is it fair enough to say that any artist should be getting this? I don't know. But you could say, well, that threshold is not that ambitious, although I would say actually, the 1000 streams, maybe not the 500 listeners you nee, actually, I think that that is quite a high bar to cross because there could be some artists out there who have a couple of 100 really engaged rounds, who are therefore getting 10s of 1000s of streams a month, but would lose out because of that 500 listeners thing. But maybe the threshold is, you know, an okay way to say, right, once you're above that threshold, you are a professional musician. And below that threshold, you're more of a hobbyist, making music for fun, and then uploading it up onto Spotify and Deezer, etc.

I would suspect that what Deezer and Universal are hoping to achieve with this threshold is to make a distinction between what you might want to call, we've referred to already as hobbyist artists, versus sort of DIY independent artists. So obviously, hobbyists, artists, and DIY artists are often distributing their music through the same DIY distributors. But the distinction I guess, between a hobbyist and what you might call the DIYs, phase artists or an independent artist is the former artists who are making music for fun, they just happen to then use TuneCore, Distro Kid or Ditto to get their music on to the streaming services, versus those artists who are either early on in their music career, they're very much in the DIY phase. And their ambition is to become a full time musician and start working with labels, et cetera.

Or indeed, you have those independent niche artists who don't necessarily get big numbers on streaming, but who nevertheless, do some gigging and they maybe have a bit of a direct to fan relationship going, and they make some of their living out of the music, possibly they teach music the rest of the time. So I guess the question is, with these thresholds, and this sort of 1000 streams, 500 unit listeners have they managed to carve out the hobbyist musicians from the dry phase artists, because I'm not even convinced whether or not it's fair to say the hobbyist musicians should get less money. But I think it's definitely not fair to say DIY stays artist should get less money. So I suspect that that's what they're trying to achieve with this threshold. Have they achieved it? I don't know. Maybe they have, maybe they haven't.

Andy Malt 17:41
Yeah, and even if it has, it's nevertheless Deezer and Universal Music officially stating that music from hobbyist artists should be treated differently, which is quite a bold position to take. Deezer does note that it's data analysis showed that fans mostly consumed music from the artists they love and show little interest in music from hobbyists, or functional music. However, as it currently is, if people don't listen to music from hobbyists, then they just don't get allocated any of the money. And if say, five people do love and listen to music from a hobbyist artist, driving a few 100 streams each month. Is it then right for the industry to then say that, that music and those artists should be treated differently and have less money allocated to them? I mean, if there's one thing we all know about music, it's that popularity and artistic merit are not necessarily connected. So it'll be interesting to see how artists respond to that element of the artist centric model that has been diligently developed on their behalf by as we say a bunch of non-artists.

Andy Malt 18:58
And finally, on this edition of setlist, Svenska Dagbladet, one of Sweden's leading tabloid newspapers last week published what it says is a detailed expose a of gangs in Sweden, using Spotify as a means of laundering money obtained through criminal enterprises. The story put stream manipulation and streaming fraud very much back into the spotlight, with two organisations representing music publishers subsequently issuing statements saying that the industry has a shared responsibility to tackle crime links to streaming fraud.

Chris Cooke 19:31
So yes, stream manipulation, of course, is where individuals or companies artificially inflate the number of streams of a specific track, sometimes manually or more often through automated processes, sometimes via free accounts on Spotify, or maybe Premium accounts that they've bought for the purposes of doing the manipulation, or sometimes simply by hacking otherwise legitimate user accounts in order to increase those streams. Now, obviously doing this breaches the terms of service of the streaming services also likely breaks certain laws around computer abuse and misuse. Again, obviously, this process is employed because it can make a track or maybe a whole catalogue or an artist seem more popular than they really are. And there were various reasons in the industry why an artist or catalogue owner or a label might want to do that. Plus, of course, because of the way streaming works, which we've already explained on this edition of setlist, because of the way streaming works, if you artificially inflate how many times a track has been streamed at the end of the month, a higher portion of the streaming services, monthly revenue is going to be allocated to that track, to the detriment of all of the other music that has been streamed that month.

Andy Malt 20:47
Now, there are a number of different parties involved in stream manipulation, each with different motivations. Some are actively involved in the process of artificially inflating streams, but many hire the services of another entity to actually do the manipulation. A study by the Centre National De La Musique in France identified four parties. They are established artists who may seek to artificially boost plays to maintain a job position or reach a certain stream threshold in the first week of release. emerging artists who might seek to artificially boost plays in a bid to positively impact search engine optimization, influence streaming service algorithms or playlists or to generally appear more popular with fans and potential business partners. And then there's companies who deliver their own music to the streaming services and then automatically generate streams for that music so that they are allocated a portion of streaming service revenues at the end of the month. Plus there are artists, labels, or other entities who seek to harm competitors by artificially boosting plays of other people's music in the hope that the manipulation is detected. And a track is therefore removed from a service or demoted in terms of publicly visible data or chart position.

Chris Cooke 22:04
Yeah, that'd be a particularly horrible thing for an artist label or entity to do, but apparently it happens because there are not nice people out there. Now, we also cover streaming fraud and streaming information in the latest one step ahead report that we here at CMU have produced for IMPALA, the Pan European organisation for the independent music sector. And in that report, we also run through some other groups of people who might be motivated to do a little bit of string manipulation. So that includes catalogue owners who may seek to artificially boost plays to inflate the value of their catalogues, for example, maybe they're looking to sell a catalogue, because there's a lot of catalogue sales going on at the moment.

It may also include marketing agencies who might artificially boost plays to make it appear to their clients, like the marketing campaign they've just run was much more successful than it really was. Maybe executives in music companies artificially boost plays in order to reach internal targets, they have been set.

We also suspect. Now we don't actually have any actual evidence of this one. But it wouldn't surprise me if certain fan bases who get very excited when artists have new tracks out and they want those artists to be at the top of all of the charts, if there aren't some fans, who would say, Oh, I'll pay $50 to help my favourite artists have the most stream track of the week. So that's potentially another contributing factor to all of this.

And of course, there are many companies who do the actual stream manipulation, who just do that to make money. They've turned that in to a business. If you Google, you know, how do I get more streams on Spotify, there are plenty of those services to choose from.

Andy Malt 23:45
But don't do that. Don't go and google that now, if you're an artist, or label or whatever, just yeah, just know that you that's a thing that could happen, but don't do it.

Chris Cooke 23:57
Are you telling people not to do it because it's the wrong thing to do? Are you telling people not to do it because you don't want them to stop listening to our podcast? Or both. Actually, a couple of years ago, when we were doing the research or another one step head report for IMPALA members, that was on playlists and curation, and how all of that works. So therefore, I was spending quite a lot of time sending emails and doing Google searches and reading articles about playlist and curation. And for about six months after that, the Facebook algorithm, the Google algorithm was stalking me with these adverts of $50 1000 streams guaranteed, etc, etc. So there are plenty of companies out there who have managed to turn stream regulation into a viable business.

Andy Malt 24:41
Yeah, and on top of all of that, there's also been regular speculation within the industry that criminal gangs are involved in streaming fraud, often as part of money laundering activities, which brings us back to this report in Svenska Dagbladet. I'm sure that I'm saying that right. Certain, absolutely certain. So this report alleged The gangs in Sweden have partnered with certain artists use the profits from other criminal activities to hire the services of stream manipulation companies, and then shared in the royalty uplift the scam generated for the artists. And then at the end of that their cut of the Spotify money appears to be legitimate income. The newspaper cited sources from four different gang members from separate criminal networks in Stockholm as well as an anonymous police investigator. And it quoted one gang member as saying I can say with 100% certainty that this goes on. I have been involved in it myself.

Chris Cooke 25:36
As we said, this new report in this newspaper prompted some statements from a couple of industry organisations. So first of all, the independent music publishers international forum that said reports that suggest streaming forward is funnelling significant revenue towards the activities of organised crime are incredibly disturbing and increased pressure on streaming platforms to stamp out the practice as a matter of urgency. Fraudulent streams have been a growing problem for some time. Now. They then cited actually the French study that we talked about earlier, which also estimated that about 3% of streams in France were in essence fraudulent, and those are the ones which was spotted, so it could be significantly more than that. And the statement from this organisation continued not only our independent publishers and legitimate music companies suffering financial damage as a result, but the suggestion this issue is aiding and abetting violent criminals mean it must become a critical priority for streaming services.

Andy Malt 26:31
Also commenting on last week's report, Sarah Williams, the CEO of IMPEL, which coordinates digital licencing for a consortium of independent music publishers stated, “IMPEL is glad to see Svenska Dagbladet, shining a light on the role of organised crime in the business of fraudulent streams. challenging as it is, we can't turn away from our shared responsibility for tackling this issue. At the moment, various industry players in groupings are looking for suspicious patterns in the data and trying to tackle the problems that they reveal. It's very welcome. But we must avoid an ad hoc approach. We need comprehensive integrated initiatives that attack this multi headed hydra from all angles. We also need transparency from and coordination between streaming services. While streaming has created opportunities for criminals to syphon off huge sums. The wealth of data created by the digital industry is also our friend in this fight, provided we use it collectively.”

Chris Cooke 27:29
Now, there has been increased talk in recent months about the need for a more coordinated approach to tackling streaming fraud, because most of the streaming services and the record labels and the music distributors have policies and systems in place to try and monitor and identify manipulated streams and to block those activities and to make sure that money doesn't flow through to these rogue agents. But it is felt by lots of people that all these companies independently trying to crack down on this isn't really working, what needs to happen is people need to be sharing information and intelligence and knowledge to make sure that the industry at large is having a much bigger impact.

I think it's also important for everyone to understand the different kinds of string manipulation, all those different groups who are involved in this. So we mentioned earlier, there have sometimes been a tendency in the industry to focus on the streaming fraud and streaming information that doesn't actually involve the industry. So the people who create their own generic music, upload it to the streaming services, and then set machines playing that music in order to pull money out of the royalty pool. And that's the kind of streaming fraud that people have often talked about in the past, even though that actually really is the easiest kind of stream manipulation and streaming fraud to spot and to deal with.

And it does feel like actually some of those other kinds of streaming fraud, many of which actually involve people in the music industry, or as if not more prevalent. So yes, we need a more joined up approach. And we need to be making sure that we're looking at all the different kinds of stream manipulation and trying to deal with them.

Andy Malt 29:06
Plus, I suppose, where criminal gangs are involved, law enforcement probably needs to be a part of that joined up process to and to that end, several industry organisations are trying to facilitate a more joined up approach to tackling streaming fraud. And earlier this year, a group of distributors and streaming services came together to launch the Music Fights Fraud Alliance. Will that work? We shall see.

Chris Cooke 29:30
We shall indeed. Meanwhile, a couple of plugs if you are a member of Impala or an impala allied organisation around Europe do go and check out the new consumption of rights report that we have produced as part of the onestep head programme that is supported by Merlin and you can access that from the One Step Ahead channel on the CMU learning platform. You can get information on how to access that from either Impala or your local national independent trade organisation and in there you will find some more information and about streaming installation. Actually, we also have a little bit about desus artists centric model. So do go and check that out if you are an IMPAL member.

Plus, we are currently putting together a much more detailed report on stream manipulation, which we'll be making available to members of CMU Pro. We mentioned that a bunch of new things launched last week around CMU, the new brand, the new website, the new look daily, but as part of that, we also have a new membership offering that we're in the process of rolling out. And one of the benefits of becoming a member of CMU Pro will be you'll have access to a bunch of reports that we have in the pipeline. And one of those is all about stream manipulation. So you can already sign up and become a member on the website, complete music update.com And it will also put a link in the notes with this edition of setlist. So if you get yourself signed up once that report is published, you will be able to access it.

Andy Malt 30:49
Yeah, but that's all we've got time for on this edition of Setlist. Do go and check out those show notes that Chris just mentioned, there will be links in there to everything that we've discussed on this episode of the show. Don't forget to subscribe to the show if you haven't done that already. And so you get new episodes pushed to your podcast player every week, every week when you're travelling again. So every week, every week, also rate and review the show because that helps to game the algorithm. Not gaming it if you just say nice things right and review the show. That's what I'm saying. And then more people will find the show and maybe Chris can go and have lunch or something. Email us if you've got anything to tell us setlist@unlimitedmedia.co.uk.

Setlist is the music business podcast from CMU. It's presented by Andy Malt and Chris Cooke and for more on CMU go to completemusicupdate.com

Transcribed by https://otter.ai