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PAYMENT OPTION TRANSPARENCY
(POT)

RESEARCH PROJECT ON THE IMPACT OF VARIOUS ALTERNATIVE MUSIC STREAMING PAYMENT MODELS 

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OVERVIEW

As part of the POT project important basic research is to be initiated with regard to alternative payment models in music streaming. The topic of payment models has been one of the most discussed within the music industry and the artist & author community. After all it's about distributing the money from one of the biggest sources of revenue in the music business.

The current state of research is to be supplemented by goal-oriented basic research with the aim of providing a well-founded basis for discussion between artists and representatives of the music industry. Without this basis no consensus and therefore no meaningful evaluation of the payment models is possible.

INITIAL SITUATION

PROJECT IDEA

More than a decade ago, it was decided that the distribution of income from music streaming subscriptions should be based on the so-called "pro-rata" model - i.e. based solely on the total number of streams.

Due to the simultaneous decline in physical music sales, income from music streaming subscriptions has become the dominant source of income for artists and authors, alongside fees and performance fees.

To date, however, nothing has changed in the originally agreed distribution model. Even the mere debate about how to optimize distribution is only just beginning: with one exception - the so-called User-Centric Payment System (UCPS) - alternative models have not yet been explored.

In line with many voices from the industry PRO MUSIK sees the urgent need to feed the discussion about alternative models with meaningful data. 

Existing research on UCPS is still incomplete. Previous studies either did not come to clear conclusions (Digital Media Finland, FI, 2018) or focus on a potential redistribution from mainstream towards niche artists (e.g. Center National de la Musique, FR, 2021). The latter study arrived at the conclusion that UCPS would not lead to substantial changes. This has led to disillusionment among artists, musicians and within the indie music space.

It is true that such a redistribution from “top” to “bottom” by UCPS would not or hardly exist. However, we believe that this model would in fact lead to noticeable redistributions. These effects would not arise in relation to “mainstream” or “niche”, but only become visible when the data is examined from a different perspective.

Initiatives such as Broken Record, FixStreaming or Justice At Spotify show how important the discourse on alternative payment models is to music creators. However, this discussion lacks well-founded insights into the effects of alternative payment models.

We therefore consider further research on the matter to be necessary.

The current payment model can only be optimized if there is a consensus on the part of the rights holders on which alternative model should be introduced. For example, Spotify (on its Loud & Clear website) stipulates that artists and rights holders must first come to an agreement. But the music community is still a long way from reaching such an agreement, as there is little reliable knowledge available. This creates a stalemate that stands in the way of optimizing the payment model.

The idea of ​​the POT project is therefore to create reliable knowledge as well as transparency for music creators and to enable them to engage in a discussion around alternative payment models. Only when artists and their representatives can rely on a comprehensible basis for discussion can the stalemate be lifted and a desired change be implemented across the board.

PROJECT GOAL

The project aims to support targeted research on the effects of alternative payment models on the streaming market. Our focus lies on the development of neutral key figures that enable an objective comparison of different models. In addition to UCPS, we aim to analyze the effects of considering the actual listening time and other criteria would have on the distribution.

As an association of independent musicians - those who create and practice music - PRO MUSIK has a particular interest in preparing the topic in such a way that artists and songwriters can for the first time assess the potential impact on their individual income.

The overriding goal is to enrich the level of knowledge within the artist community, but also to enable the subsequent dialogue with the music industry, at conferences and in the media.

IMPLEMENTATION

Several tasks have to be fulfilled for the successful implementation of the project. On the one hand, this includes the development of a study concept, i.e. the definition of different payment models, the selection of objective key figures and suitable visualizations, as well as the formulation of text modules.

On the other hand, it is necessary to request the necessary data from streaming services and to prepare them in a meaningful way. In the best-case scenario, data should be acquired from at least one of the leading providers (e.g. Spotify, Amazon Music or Apple Music). Since they have already generally indicated their willingness to support further research in a survey by the British Parliament, they are to be officially asked as part of the project.

In addition, other providers are to be won for cooperation (e.g. Youtube Music, Deezer, Soundcloud, Tidal etc.)

Project manager Ryan Rauscher - an expert in digital music business, data analysis and music streaming - will coordinate all measures. In addition, a data scientist, a research institution and communication services (web/advertising design, doctorate) are involved in conducting the study.

PERSPECTIVE

The way in which music streaming revenue is distributed is critical to the future development of music culture. The chosen payment model has a direct effect on the creative process and is therefore a central framework for the production of artistic works. Simply counting streams could potentially distort the distribution of financial resources because other important criteria - such as the number of listeners, the actual listening time or the listening context - are not taken into account.

Without the discourse about optimizing the payment model, we leave the artist community to an unreflected distribution of revenue, with unknown consequences for the musical supply of tomorrow.

 

Only if potential alternative models are outlined, their financial effects are made transparent and artists / songwriters are empowered to participate in the discourse, can confidence in the economic potential of music streaming be (re-)established.

RESEARCH LEAD

RYAN RAUSCHER

Ryan Rauscher is an expert in the digital music business, with 13 years of experience in both academic and practical fields. From 2008 to 2013 he set up and led a competence center for digital music business for the Popakademie Baden-Württemberg. From 2015 he built up the Business Intelligence & Data Analytics team for Sony Music Germany, before he was part of Sony Music's team managing the global partnership with Spotify in New York (2019 - August 2021). Bringing in competencies in the areas of research, data analysis and music streaming, Ryan Rauscher aims to contribute to the fact-based analysis of alternative payment models in music streaming.
 

ryan.rauscher@promusikverband.de

COMMUNICATION & PRESS-CONTACT

ELLA ROHWER

Ella Rohwer is a classically trained cellist with a hybrid artistic identity in the fields of pop, crossover, theater and contemporary music. In addition to her work as a live and studio musician, she also works as a lecturer at the HfMT Cologne - Wuppertal and arranges and directs string ensembles in various contexts.

On a voluntary basis Ella is founding member and 2nd chairwoman of freelance musicians union "PRO MUSIK - Verband freier Musikschaffender e.V."

ella.rohwer@promusikverband.de

AXEL MÜLLER

Axel Müller is a professional freelance musician. After having completed his artistic jazz & pop studies at Musikhochschule Mannheim (diploma 2004) he became a session and touring musician, working as a sideman for many German bands and solo-artists such as Nena, Michael Patrick Kelly, Mark Forster, Sarah Connor, Sasha and many more. As a saxophonist & multiinstrumentalist he is part of "Gregor Meyle & Band", "Niedeckens BAP" and works for the famous TV show "Sing meinen Song".  

On a voluntary basis Axel is founding member and 1st chairman of freelance musicians union "PRO MUSIK - Verband freier Musikschaffender e.V."

axel.mueller@promusikverband.de

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