Deezer is reportedly looking to change its licensing structure. Mark Mulligan of MIDiA Research exclusively reported that Deezer is looking to pay out fees based on the percentages of a listener’s subscription fee. This is a model dubbed user-centric licensing. Streaming platforms operate on a service-centric licensing model, where royalty payments are made to artists based on share of airplay across the entire listener base.
The best way to distinguish is by an extreme example. If an individual spends 100% of their time listening to Janelle Monae, under the user-centric model, all of the revenue generated by that person would go to Janelle Monae (except for the share kept by the streaming company). Under the service-centric model, however, no matter how much that person listens to Janelle Monae, if streams of her music represent just 10% of all listening on that platform, she will receive 10% of the subscription revenue from that person.
Such a system poses many monetary and mathematical challenges, not the least of which is that few people have such clean-cut listening habits. However, Mulligan said that the response from labels so far has been “cautious optimism“ about the approach. “If Deezer is able to persuade the labels to put user centric licensing in place, it will be another sign of increasingly maturity for the streaming market,” he wrote. “User centric licensing could, and should, be just one part of getting streaming ready for another 5 years of growth.”