Universal Music Group, the label that spans Taylor Swift and Sam Smith to The Chemical Brothers and Tame Impala, has struck a deal with French streaming platform Deezer and is reported to be in talks with Spotify, Tidal and SoundCloud about rebooting the payment model.
The new model agreed by UMG is designed to enhance payouts to professional musicians by means of redirecting funds away from “non-artist noise content” including amateur, AI-generated music and other white-noise sounds.
Under new music streaming payment model will prioritize streams of songs from musicians receiving at least 1,000 listens monthly from a minimum of 500 unique listeners.
The pair said they expect this will filter out the “noise” content.
To pay professionals more, it will do this by counting them twice as much as those from non-professionals when determining royalty fees, with songs that are detected as “noise” not receiving any royalty payments.
It will increase payments to professional artists by 10%, the Financial Times reported.
AI music, deepfakes and other “noise”
Deezer, which calculated that roughly 2% of streams on the platform are “noise”, will start using the system in France in the final quarter of 2023, as well as applying what it said will be a “stricter provider policy to ensure quality and a better user experience”, including steps to limit noise content.
Earlier this year Spotify Technology SA was reported to have removed “tens of thousands” of songs created by AI-generated music service Boomy, after a complaint by UMG, which suspected online bots were posing as human listeners to inflate the audience numbers for certain songs.
The deal might be expected to have significant ripple effects for song rights holding funds such as Hipgnosis Songs Fund Limited (LSE:SONG) and Round Hill Music Royalty Fund Ltd (LSE:RHMP, OTC:RHILF), as well as One Media iP Group PLC (AIM:OMIP).
Euronext-listed UMG shares rose 1.2% and Paris-listed Deezer’s by 1.9%. Hipgnosis rose 0.6%, Round Hill fell 0.4% and One Media was unmoved in early afternoon trade.
“This is the most ambitious change to the economic model since the creation of music streaming,” Deezer chief executive Jeronimo Folgueira said.
He said the “necessary change [would] better reflect the value of each piece of content and eliminate all wrong incentives, to protect and support artists.
“There is no other industry where all content is valued the same, and it should be obvious to everyone that the sound of rain or a washing machine is not as valuable as a song from your favourite artist streamed in HiFi.”
However, there were also reports this year that UMG was in talks with Google to license artists’ melodies and voices for songs generated by AI, following a surge in “deepfake” songs that provide an accurate mimic of the sound of established artists, generally without consent.