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  • Mark A. Skoda

Shaping the Future of Streaming: User Centric Payment Systems (UCPS)


Introduction

As the music industry continues to evolve, streaming platforms find themselves under the microscope. At the heart of the debate is the concern over fairness in the distribution of royalties. In response, platforms like Spotify and Apple Music are contemplating the adoption of a user-centric payment system (UCPS) to disburse these royalties. With UCPS, each listener's subscription fee is equally divided among the artists they choose to stream, creating an ecosystem where every play counts. It's a revolutionary proposal, promising a more equitable compensation model.


Current System vs. UCPS

The current standard, the market share payment system (MSPS), aggregates all revenues and disperses them based on the total streams a song receives. In simple terms, it's a pooled pot where the most played songs earn the largest share. Conversely, UCPS puts the power in the hands of the listener, ensuring each user's subscription fee directly supports the artists they love.


Impact on Revenue

The adoption of UCPS could result in considerable shifts in streaming revenue distribution. Although top artists might see a slight drop in royalties, it's projected that lesser-streamed artists could experience a noticeable increase. This redistributive effect could potentially give a significant revenue boost of 40% or more to nearly a third of artists. The actual effect would depend on numerous factors, including user engagement, audience contributions, and listening habits.


Impact on Genres

The influence of UCPS might not be uniform across all music genres. Some genres such as soul, electronica, reggae, trip-hop, hip-hop, rap, R&B, new age, and Afro-beat could face a downturn under UCPS. Conversely, genres typically favored by older audiences, including jazz, metal, blues, and classical, may reap benefits, reinforcing that the impact is largely dependent on listeners' preferences.


Direct to Artist Payments

In the wake of this paradigm shift, platforms like TIDAL are innovating with direct-to-artist payments. Under this model, a portion of a subscriber's fees go straight to their most-streamed artist. By directing funds from listeners to the artists they love, platforms can foster stronger artist-fan connections, further embodying the ethos of UCPS.


Championing Transparency and Fairness

For years, artists and industry insiders have voiced their disapproval of the traditional MSPS model, arguing that it disproportionately benefits major labels at the expense of independent or less mainstream artists. UCPS counters these concerns by championing transparency and a more equitable spread of revenues[^6^]. This model also addresses concerns of fraudulent accounts, such as streaming farms, which can manipulate the current MSPS.


User Behavior and Impact

The success of UCPS largely hinges on the listening habits of users. Dedicated fans who consistently stream specific artists would boost their favorite musicians' earnings, while casual listeners could dilute the value of streams. Thus, under UCPS, artists would need to cultivate a high share of listening per subscriber to optimize their earnings.


UCPS in Practice

To understand the practical implications of UCPS, we can look at platforms such as Deezer, Soundcloud, and TIDAL, which have begun exploring this model. Deezer has long advocated for UCPS, stressing its fairness, transparency, and potential for a more balanced allocation of funds. TIDAL has incorporated the model into its new membership tier, signaling a commitment to an alternative model for musicians and writers.


Challenges of the UCPS Approach However, there are challenges to consider with UCPS. It involves more complex calculations and requires extensive data analysis, making it technically challenging for platforms to implement. Additionally, this approach could disrupt the current remuneration system that mainstream artists and major record labels have grown accustomed to, potentially leading to resistance from these stakeholders.

Implications of the UCPS Approach The implications of UCPS are considerable. For one, it may lead to a more equitable distribution of revenue, ensuring that artists are paid directly proportional to their actual listener base. This could be a game-changer for emerging artists or niche genres that have dedicated listeners but might not generate mass streams.

Furthermore, UCPS encourages diversity in music consumption. Because listeners' subscription fees are distributed among the artists they actually listen to, fans can directly support their favorite musicians. This has the potential to promote a wider variety of music and enhance the overall health of the music ecosystem.

Benefits of the UCPS Approach The benefits of UCPS are clear and directly align with the ideals of fairness and transparency. Under this model, every stream counts, and artists are compensated based on their listenership. As a result, musicians gain a more predictable income, providing greater financial security and independence. Moreover, UCPS benefits the listeners. As they become aware that their subscription money goes directly to the artists they listen to, it can lead to increased satisfaction and a sense of personal contribution to their favorite artists' success.

In conclusion, the UCPS model, while not without its challenges, holds great promise for revolutionizing the way artists are compensated. Its focus on fairness, transparency, and listener-centric distribution could reshape the music industry, providing a more equitable and diverse musical landscape. It's a step toward recognizing and validating the true value that each artist brings to the table, thereby creating a more sustainable environment for both creators and consumers of music.



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