Tidal and DistroKid, the popular indie music distributor, teamed up last week to offer a direct artist payments system. This partnership foreshadows a bigger pivot from Tidal toward trying streaming payment models that are believed to distribute money more equitably to musicians who don’t get millions of streams on any given day (AKA, people who aren’t Taylor Swift or Lil Nas X).
If you’re on Tidal’s HiFi Plus plan – which costs $19.99 a month – up to 10% (or about $2) of your monthly subscription fee will be distributed to your most listening artist (as long as that artist uses DistroKid). This percentage shrinks if you pay for your subscription through a service that requires a deduction, such as the Apple or Google App Stores. Tidal told TechCrunch that it has also struck similar deals with independent distributors such as CD Baby, Equity Distribution, Stem, Symphonic, Tunecore and Vydia.
This model is an example of a user-centric payment system (UCPS), which is generally preferred by artists. As described by Deezer, the streaming service that uses UCPS, this system helps individual fans directly and transparently support their favorite artists, as their subscription fees are distributed to the artists who listen to them. So, let’s say you listen to a 10-track record at once on a platform that pays about a cent per stream, like Apple Music. Then, that artist will earn 10 cents (and that’s before distributors and publishers take their cut). But, on a UCPS platform like Deezer or SoundCloud, if you’re listening to 10 albums from 10 different artists per month, a portion of your monthly subscription fee will be split over those 10 artists, which means they probably get more than 10 cents each. It’s similar to buying a CD – it’s not about how often you listen to that CD, but rather the fact that you bought it in the first place.
Tidal told TechCrunch that in addition to its deals with independent distributors, some kind of UCPS will reach the HiFi Plus category starting in January 2022. The platform says it has teamed up with more than 100 posters — both major posters and freelancers — to develop what it calls a fan-focused royalty program.
Currently, major streaming platforms like Apple Music and Spotify pay a pro-rata fee, which splits a pool of money based on the total streams. But the growth of music streaming services — an effort to answer the music piracy crisis — has not, in general, been great for musicians. Musicians’ primary source of income is now on tour, so when the pandemic hit and canceled a slew of concerts, the inequality in the payment stream became even more apparent.
last year , Union of Musicians and Allied Workers (UMAW) He launched a campaign called Justice at Spotify, which is asking the streaming giant to adopt UCPS, increase transparency around payments and pay at least $0.01 per broadcast. As it stands, the platform is estimated to pay an average of $0.0038 per stream, according to UMAW, but Spotify itself does not disclose this value, saying the payment per stream is not a meaningful value for analysis.
“We applaud Tidal’s move toward a more user-centric payment system, a shift we’ve been calling for since we launched the Justice at Spotify campaign in 2020, and one that Deezer and SoundCloud have already adopted,” Joy Di Francesco said in a statement to TechCrunch. On behalf of UMAW. “User focus is not a panacea, and we still desperately need more fundamental changes to the flow of royalties, but it is a step in the right direction.”
By comparison, Apple Music pays $0.01 per stream on average, per an internal memo leaked earlier this year. Tidal is believed to pay the same amount, although the company itself has not confirmed these numbers. But Spotify, which has the most subscribers out of the three streaming leaders, is paying as little as possible.
Spotify notes that it appears to be paying less per stream than competitors because, according to the company, Spotify users stream more music than users on competing platforms. Also, unlike Apple Music or Tidal, Spotify offers a free, ad-supported category, which the platform says may skew pay-per-stream metrics.
The artist’s live stream payments don’t arrive – first, the payments are split between artist record labels and publishers. The amount an individual artist will receive per broadcast depends on their contracts in the industry. But currently, according to UMAW, a freelance artist would need to collect 283,684 Spotify streams per month to pay a monthly rent of $1,078, which is the US national average.
Spotify acquired a minority stake in DistroKid in 2018, but just weeks ago, Spotify’s quarterly SEC filing revealed that it had sold two-thirds of its stake in the independent distributor for €144, or about $163 million. It’s an interesting timing for DistroKid to immediately strike a deal with Tidal, a service more convenient for musicians, to enact a copy of the policies UMAW requires Spotify.
But Spotify is questioning how much user-centric payments will actually benefit artists. A study from France’s National Center for Music found that annual payments will fluctuate “at most a few euros” for artists outside of the top 10,000 works.
“We’re willing to switch to a user-centric model if that’s what artists, songwriters, and rights holders want. However, Spotify can’t make this decision on its own – it requires broad industry alignment to implement this change, says the platform’s website.
Therefore, perhaps the model of Tidal deals with independent distributors – a different kind of UCPS – is more beneficial for artists. It can add a bonus of $2 per month per user for being the most streamed artist. But, industry-wide changes may require such trial and error to determine how streaming platforms can run their business while also paying musicians fairly for access to their music.
“It’s a step in the right direction to stream subscription money to support artists who are being broadcasted live – and as a Tidal subscriber, I’m happy to learn about this move. However, a $2 bonus per month – just for one artist per user, and only for artists who signed up via [independent distributors] Not many musicians would add and feel the nods,” UMAW member Sadie Dupuy told TechCrunch. Dupius fronts teams like Speedy Ortiz and Sad13. “I would be curious to see how many self-streaming artists are the number one streaming artist for any monthly subscriber overall. It also excludes distributed label artists, who also need fair streaming revenue, especially when they split 50% or more of those royalties with a tick. It would be great. Seeing more of that subscription fee split proportionally to more music workers, regardless of how their songs are distributed.”