What’s the darn problem with the current allocation of music streaming royalties (Pro-Rata)? - Part 3 - UCPS and Transparency

Context

I am writing some articles on #UCPS in particular and alternative #paymentmodels in general. Some of these posts relate to specific parts of a study I authored for PRO MUSIK - Verband freier Musikschaffender e.V.. Others will contain food for thought on important discussion points beyond the scope of that paper.?

My current focus is on the potential problem with the current payment model, #prorata - starting with what I believe NOT to be the problem. Feel free to read my initial posts on why the problem is not that mainstream artists benefit from Pro-Rata and it isn’t #streamingfraud either.

Another frequently made argument is that there is a huge problem with transparency under Pro-Rata. And that #usercentric would address that problem by being more transparent.?

To be honest, I’m not sure where that notion comes from. All I can think of is that UCPS is arguably more logical to the consumer: your subscription fee is split only between artists that you actually listened to. While that does sound sensible from a consumer perspective, I’m not sure how that is related to (reporting) transparency for artists.?

Should streaming-related reporting be made more transparent? Yes, it very likely should be. But here’s why that has nothing to do with Pro-Rata.

Myth #3: The problem with Pro-Rata is a lack of Transparency

First, we should distinguish between transparency and complexity. In the context of #musicstreaming, transparency means that an artist and their representatives receive sufficient information enabling them to understand how their income was generated and how they could maximize revenue going forward.?

So while revenue reporting currently - with Pro-Rata - might be somewhat intransparent, it could be just as intransparent with User-Centric or any other payment model. Transparency is simply about the willingness of #streamingservices to share all relevant data.?

Complexity is something different. Even if there were 100% transparency, it doesn’t mean that understanding how your income is generated and how you could maximize revenue is easy. It could still be quite complex, even if you had all necessary data.?

Pro-Rata specifically is actually fairly straight-forward. Maybe not in comparison with selling CDs or merch, but certainly in the context of payment models for streaming. In fact, some say that Pro-Rata being that simple is actually an argument for maintaining the status quo.?

After all, with Pro-Rata, all you need to look at and care about is (maximizing) streams. So this is a one-dimensional payment system that utilizes only a single success metric. By definition, almost any alternative payment model would be more complex than that.?

UCPS for instance would definitely be more complex because it is a multi-dimensional allocation model. Next to streams, you then would need to analyze (and maximize for ) the number of listeners, your share of those listeners’ consumption as well as the monetary value of their subscription.?

So even with full transparency, maximizing revenue under User-Centric is more multifaceted than with Pro-Rata. That’s not to say this would be a bad thing. The point is that complexity is not a Pro-Rata problem. And - as stated before - transparency isn’t either. Sharing sufficient data with artists can be done - or not - for any payment model.?

Conclusion on what is NOT the problem with Pro-Rata

While Mainstream artists unduly benefiting, fraud and lack of transparency are all challenges within music streaming in general, they are not problems created by the current payment model, Pro-Rata. Thereby, they cannot be solved (at least entirely) by introducing an alternative payment model like UCPS.

By ruling out these diagnoses, I am not advocating for the status quo. My aim is to clear the way for and focus the conversation on what I believe the actual problem with Pro-Rata is. What is it that we could and should solve by discussing and introducing an alternative payment model? That will be the subject of my next posting.