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Tidal will discuss artists compensation model

By Erlend Buflaten Posted: 24. Jun, 2015

Tidal's Vania Schlogel at Midem where she talked about today's payout model to rights holders (photo: Erlend Buflaten)

At a keynote address held at Midem earlier in June, Tidal’s Chief Investment Officer Vania Schlogel discussed issues related to how artists and rights holders are compensated. – We must have a discussion about what’s fair for all parties, she said.

During Vania Schlogel’s keynote at the world’s largest music conference Midem in early June, Schlogel discussed several issues and opportunities related to artist compensation on the current streaming market.

– Today’s system is so difficult to comprehend, you’ll need a PhD to understand any of it, Schlogel said, before continuing with an example of how the revenues could be shared more easily,  how a more direct link to what the customer listens to could be created and and how the artists be compensated.

– Let’s say I pay ten dollars a month and this month I’ll listen to ten songs. With this model every stream will equal one dollar. If I listen to A$AP Rocky seven times, he will receive seven dollars.

Reestablish the connection between fans and artists
Schlogel’s example is apparently similar to the user centric model developed by Arnt Maasø and his colleagues at the Sky & Scene research project at the University of Oslo.

The current payout model applied to streaming services distributes, in rough terms, revenue in accordance with artists’ and rights holders’ market share. A user centric model could potentially change the distribution scheme as revenue would be split between the artists that are actually being streamed, as this report from Sky & Scene demonstrates:
User-centric settlement for music steaming. The study was conducted on data from WiMP, now TIDAL, in the period of August 2012 to August 2013.

But Schlogel didn’t just advocate for this model out of an economical perspective, but talked about the vital connection between artists and fans.

– When you hear ever so often that an artist has been streamed several million times but is only compensated a couple of dollars,  the fans are like; “But how? How is this possible?”.

Schlogel continues by saying that the linear bond between fans and artists, where fans are certain that the money they’ve spent on an album goes to the artist, is gone with the current payout model.

– We must re-establish this connection between artists and fans. Our job in the music industry is to inspire fans and to connect fans to the artists they love, Schlogel said from the Midem stage.

Easier said than done
Maasø was one of the researches behind the Sky & Scene project which studied the user centric model. He’s glad to hear Tidal discussing the model employed today, but fears it might be difficult to make big changes in the short term:

– This is very exciting and could give a fairer payout to the rights holders. The problem is that such a substantial change would require big and extensive renegotiations of all contracts the  streaming services have signed to date.

Maasø also points out that the launch of Apple Music will make it even harder to make a transition to a user centric payout model:

– The more common today’s system becomes, the harder it will be to make changes. If this were to happen, it has to happen while streaming still is a new platform in several territories.

During her keynote, Schlogel highlighted some of the many challenges related to switching to an alternative payout model.

– This cannot be done overnight. It will require large and serious investments in accounting systems and other things, but let’s have an open discussion about it, she said.

Tidal's Vania Schlogel presents a potential alternative to today's model for compensating artists and rights holders (photo: Erlend Buflaten)

Fans would prefer a user centric model
Erik Brataas is Managing Director of digital distributor Phonofile which represents more than 1000 independent record labels.

– From Phonofile’s side we’re clear that we are welcoming a model like this , primarily because in its inherent nature the model would strengthen the relation between artists and fans.

Would you say that there’s a greater potential to switch to a model like this at present than before?

– We see this as positive signals from Tidal, and I don’t see any reasons to why Tidal couldn’t initiate a model like this.

– Could this potentially give Tidal a competitive advantage in the streaming market?

– Yes, we believe a lot of conscious fans would prefer a model that seem more fair in the way that remuneration generated from a user goes to the rights holders that the user has actually listened to. If fans in this way experience a more direct connection to the artist, it could naturally make the service more attractive, Brataas says.

Whereas Maasø says it will be harder to make the shift to a user centric model presently, Brataas is more positive.

– Tidal is a challenger in the streaming market and a perfect candidate for testing out a new payout model. There is still a lot  we don’t know about the consequences, but at some point in time we must dare to make choices that make us go from guessing- to a knowledge- and experience based discussion, says Brataas.

Music Norway has not been able to obtain comments from Schlogen nor Tidal.

View Vania Schlogels keynote from Midem 2015 below.

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