New Model For Music Streaming: Play Credits, Curation & More

“The long tail is being demonetized,” writes Mark Mulligan of MIDiA which will lead to a “groundswell of discontent” among creators. But the analyst finds hope in a new model for music streaming.

New Model For Music Streaming: Play Credits, Curation & More

by Mark Mulligan of MIDiA via the Music Industry Blog

The music industry is approaching a pivot point. On the one hand, things look positive: we have UMG’s Streaming 2.0, artist centric licensing, the impending launch of supremium and expanded rights revenue hitting $4.0 billion. But on the other we have streaming growth slowing to 6.2% growth in 2024, Artists Direct revenue growing three and half times slower than the number of artists and independent labels beginning to voice concern over the lost royalties that may result from artist centric. The real challenge facing the music industry is that both of these views of the world are true. In short, if you are big, you can see a path to getting bigger and if you are small you can see a path to getting smaller. This is Bifurcation Theory a concept MIDiA introduced a year ago. 2025 is going to be the year that the bifurcation rubber hits the road. And in doing so, it creates a major (pun intended) opportunity for all those that are not majors.

The long tail is being demonetized

Artist Centric might, just might, result in ‘”many” independent artists and labels [seeing] their royalties increase’ but what is inarguable is that many artists and labels will earn less. This is inarguable because the very essence of the model is that songs with less than 1,000 streams in the prior 12 months will not get paid royalties. To be absolutely clear, what this means is that a body of labels and artists will see their music demonetised on streaming. To be clear, demonetising the long tail is not something new, it is widely employed by the big social platforms, who set earning thresholds for their creators (e.g. you need 1,000 subscribers to share ad revenue on YouTube). But it is something new for the music business.

The groundswell of discontent is coming

When you add this to the long term challenges of feeding insatiable appetite of the algorithms with endless releases and social posts, a growing body of artists and labels are going to asking why they should bother. That this has not happened yet is probably because the majority of artists hit by this were smaller, non-label artists who were already used to small royalties and probably do not have the industry awareness to understand what is at play. The same cannot be said of smaller independent labels, who absolutely do understand the dynamics of royalty mechanisms and will already be doing the arithmetic on how the new system will impact their revenues. Distributors will be doing a similar analysis of the labels and artists they distribute. 2025 will be the year in which we see a groundswell of discontent as these industry constituents start to comprehend what is coming.

A solution…

So much for the problems, what about solutions? Now is the time to build a place for the long tail. A place where the smaller players do not have to compete on unequal terms with the bigger ones. Asymmetric models are not designed for the small players to win. That is the entire point. But simply creating an indie Spotify will not be enough. The pro rate royalty pot model was never designed for a massive long tail and porting it over somewhere else will bring the same superstar dynamics, just with smaller superstars. So, here’s a model for an independent alternative to streaming:

• Curation: A highly curated place for smaller labels and artists with human curation at the fore
• Play credits: A credits based system, whereby people can subscribe for a certain number of credits and top up if they want, with each credit equalling one play (thereby guaranteeing a fixed per stream rate rather than a wish and a prayer that the royalty pot does not get divided too many ways this month
• Discretionary pricing: Whereby labels and artists can determine (on a track-by-track basis) how many credits each track requires. Despite us having been educated so by streaming, not all music is worth the same. Labels and artists  might decide they want some of their songs to be zero credits, some to be 1 and others 10. It is a model that works well in other areas such as stock photography libraries
• Curated freemium: Instead of simply a free tier, and in addition to zero credit streams, the free, ad and brand supported ‘front door’ would be an Apple Music Radio-like set of live streaming radio stations. All with clickable ‘now playing’ track details and some with, you know, actual human DJs
• Not just music, but about the music too: Artist interviews, album reviews etc. Taking the bets of What Bandcamp and Apple Music do
• Alternative remuneration: Artist subscriptions, tipping, social commerce, Shopfiy-like artist stores, virtual items. Not each and every one of these will fit every artist and label, so these would be opt-in extras

This might sound like pie in the sky thinking, but the simple fact is much of this is already been done, some of it in the music business (e.g. Apple Music Radio for curation and interviews, Bandcamp for reviews) and some outside it (Audible and Getty Images for credits). And we actually laid out a lot of detail for a similar model in our Bifurcation report last year.

However, there is one really difficult thing needed to make this really work: artists and labels would have to remove some or all of their music from mainstream DSPs, even if this is only done on a windowing basis. But if you are a smaller label or artist facing the prospect of demonetisation then really, how much is there to lose other than the vanity metrics of stream counts? Is this way easier for an analyst to write as a blog than for a label or artist to actually do? Of course. But the alternative for many will be to play the role of the slow boiled frog.

But what is great about this approach is that it benefits both sides. The long tail gets a place where it is both welcome and stands a fair and reasonable chance of monetisation. Meanwhile, the big labels and artists have more space (and therefore monetisation) for themselves on traditional streaming.

This will not be some huge Spotify killer. It will be a Bandcamp move for the 2020s. A place for alternative-minded super fans who do not want to spend their entire time lost in the algorithm’s mainstream maelstrom. Music is not all the same, it has never been. It is time to stop pretending that it is.