UMG, TIDAL team up to develop ‘artist-centric’ payment model

Universal Music Group (UMG) has entered into partnership with music streaming service TIDAL to explore what the two companies call “an innovative new economic model for music streaming that might better reward the value provided by artists.”

The arrangement will see UMG and TIDAL work together to develop alternative streaming payout models. The companies said they were researching how music services and platforms could “generate greater commercial value for every type of artist by harnessing fan engagement.”

They added that they were also looking into how different economic models could accelerate subscriber growth, deepen retention and better monetise fandom to the benefit of artists and the broader music community.

The announcement follows a memo sent to UMG staff on 11 January by chairman and CEO Lucian Grainge in which he shares his plan for a switch to an “artist-centric” model to change the way artists and rightsholders are paid by streaming services.

Grainge wrote: “[To] correct [the streaming payout] imbalance, we need an updated model. Not one that pits artists of one genre against artists of another or major label artists against indie or DIY artists. We need a model that supports all artists — DIY, indie and major.

“An innovative, ‘artist-centric’ model that values all subscribers and rewards the music they love. A model that will be a win for artists, fans and labels alike, and, at the same time, also enhances the value proposition of the platforms themselves, accelerating subscriber growth, and better monetising fandom.”

Commenting about the development, TIDAL lead Jesse Dorogusker said: “From day one, TIDAL has stood out as artist-first, leading with a premium subscription tier to pay artists more and experimenting with new ideas like fan-centred royalties to see if there are fairer and more equitable ways to get artists paid.

“We are setting aside our current fan-centred royalties investigation to focus on this opportunity for more impact. We’re thrilled to partner and learn along the way about the possibilities for more innovative streaming economics. This partnership will enable us to rethink how we can sustainably improve royalties’ distribution for the breadth of artists on our platform.”

UMG executive vice-president, chief digital officer, Michael Nash said it had become increasingly clear that music streaming’s economic model needed innovation to ensure a vibrant and sustainable future.

“Tidal’s embrace of this transformational opportunity is especially exciting because the music ecosystem can work better – for every type of artist and fan – but only through dedicated, thoughtful collaboration,” Nash said.

“Built on deeply held, shared principles about the value of artistry and the importance of the artist-fan relationship, this strategic initiative will explore how to enhance and advance the model in keeping with our collective objectives.”