Image credit: micheile henderson

As music streaming services look to develop with two-tier licensing, what does this actually mean?

The world of music streaming is transforming slowly. Both Deezer and Spotify have recently announced changes to how they treat artists and certain music on their platforms.

These changes include variations to how and who they pay out to. There will no longer be a one-size-fits-all definition for streams on music services. Though only seen with Deezer and Spotify at the moment, we’re likely to see the definitions change for music streaming in general.

What does two-tier licensing mean? It means that there is a difference in streaming royalties based on certain criteria. For example, songs earning more once they reach a certain number of streams.

With Spotify’s recent announcement, it means that not everyone will get paid a percentage of their overall revenue per stream. Instead, songs with over 1,000 streams will be paid from the pot whilst streams with less than the threshold won’t earn any revenue until they reach it.

Spotify are also changing the definition of a qualified stream for non-musical noise tracks. This includes nature sounds, whale sounds, and white noise tracks. These types of audio content will require two-minutes of listening time to generate stream instead of 30 seconds from now on. Spotify plan to reduce payouts on non-musical content to a fraction of other songs in the future.

Spotify will continue to pay publishing royalties on tracks whether they have reached 1,000 streams or not.

Deezer recently worked with Warner Music and Universal Music to introduce a new streaming model. Their new policies works slightly differently to Spotify’s new approach and will actively pay artists who engage with listeners regularly more.

For example, Deezer will be boosting payments to artists who make more than 1,000 streams per month from 500 listeners or more. They will also double remuneration for artists who are gaining interaction from listeners naturally, rather than through algorithmic recommendations.

Deezer are also looking to demonetize non-musical noise tracks. They wish to replace the content with their own, streamlined noise music that users can tap into. This content won’t generate royalties, freeing up all the cash from non-musical tracks to go to artists.

Currently, Deezer have only introduced their new model in France for Warner and Universal artists.

Streaming royalties have long been a contested issue. As the industry grew massively around music streaming, revenue decimated by piracy was recovered and then some. But, it has also presented its challenges as the distribution of royalties works so differently.

This seems to be a new chapter in deciding how we pay artists, labels and rightsholders. We are shaping a new future for music streaming and hopefully it will work better for artists. Taking streams away from gaming content and non-musical tracks will be a big help, but the potential to hurt smaller artists by rewarding more engagement may detract from how music streaming services have equalised the playing field in music.