Warner Music Joins the Artist-Centric Party: But Are Major Labels the Only Ones Benefiting Here?

On Monday, the President of Warner Music France announced WMG’s support for Deezer’s artist-centric compensation system. Now, with two of the three biggest music labels endorsing the model, Deezer could (quite possibly) hit the ground running when it launches globally in 2024.

In our latest DMNPro Weekly deep-dive, we track the dizzying developments surrounding the music industry’s potential shifts in streaming platform compensation, and catalog the proposed changes across both user- and artist-centric compensation methods. Critical players in this report include Deezer, Universal Music Group, Spotify, Believe, AIM, A2IM, SACEM, Wagram Music, and Stem Disintermedia.

Why are major labels backing Deezer’s proposal, and will Sony Music join the artist-centric party next?

Earlier this year, CEO of Sony Music, Rob Stringer complained extensively about streaming services accommodating and promoting ‘meaningless volume and low-quality content’ alongside (what he called) ‘premium-quality artists.’ Deezer’s artist-centric system — on paper — sounds like it’s been custom-built to solve Stringer’s problems. Even better, the Sony boss had suggested shifting to a different payout system that would eliminate bottom-of-the-barrel content.

Deezer’s model has already received quite a warm welcome from Universal Music Group and Warner Music Group. That’s because at its core, the artist-centric system revolves around building (monetary) benefits that are exclusively accessible by these mega players and their artists. Primary enhancements proposed by Deezer under its model are essentially tailored to provide premium payouts to ‘professional’ artists (famous ones), and ‘engaging artists’ (those that listeners actively search for, and play).

That definition matches 100% of the artists on The Big-Three’s roster – ‘professional, established, premium-quality’ artists. Deezer will reward such artists by allocating ‘Double Boosts’ to their tracks, which prequalifies them to gain a higher percentage of royalties from the overall pool. 

Moreover, Deezer’s plan to demonetize all white-noise content (and replace it with their own ‘functional’ music that doesn’t draw royalties) will pour creators’ former streaming share into the main royalty pool — leaving more for (UMG and WMG’s) ‘professional and engaging’ artists to take home. Soon, (with a Deezer tie-up) Sony’s ‘premium-quality’ artists could also qualify for these artist-centric payouts.

All in all, Deezer’s model reallocates several extra millions of dollars in royalties to established artists. The more these artists make, the more their (major) labels make. But what about the indies? Can they sign up for these ‘Double Boosts’ and artist-centric perks?

Of course, UMG isn’t entirely wrong to assume that the music industry revolves primarily around ‘serious’ and established artists. These artists draw a disproportionate amount of fans to streaming platforms like Deezer, along with valuable subscribers. Nonetheless, one can’t deny that lesser-known artists do have an audience — albeit smaller.

UMG boss Sir Lucian Grainge went so far as to refer to anyone against the Deezer system as ‘Merchants of Garbage.’ But this approach is drawing pushback: IMPALA, for one, called out the Deezer model for propagating a ‘two-tier system’ that discriminates against lesser-known artists — the undiscovered, the unsigned, and even the indie-signed. Tunecore-parent Believe calls the artist-centric model a ‘reverse Robin-Hood system,’ removing royalties from indies’ pockets and handing them out to major artists.

Is Deezer really discriminating against independent artists? We dig deeper into the entire artist-centric controversy in the DMNPro Weekly Report.

However, looking at Deezer’s deal with indie label Wagram Music, one wonders whether Deezer’s artist-centric model is rewarding established artists, or anyone that agrees with its model.

The latter appears suspiciously accurate, but we’re withholding judgment until 2024’s global rollout of the artist-centric payout system.