Universal Music Group renews licenses with Meta and positions itself against the “user centric” model – Music Industry

In the past week, Sir Lucian GraingeChairman and CEO of UMG, confirmed on the earnings call that his company had signed a new license agreement with Goalparent company of Facebook and Instagram, which “expands revenue sharing and improves the engagement of the Meta community with our catalog.”

Obviously, that agreement covers the use of UMG’s music within the Meta’s new video payment model for the music business. Meta announced last week that, beginning with Facebook In the US, music rights holders will now get a direct share of advertising revenue generated by certain types of user-generated videos containing licensed music.

In the structure of this payment model, users who upload the content receive 20% of the advertising revenue generated, and the remaining 80% of that money will be divided between Facebook/Meta and music rights holders.

“We are very excited about the renewal with Meta, the ways it deepens our partnership, and the new opportunities around revenue sharing,” he said. Michael Nash, EVP of Digital Strategy at UMG. Nash later added, “It’s an exciting opportunity for us to participate in the creator economy and let them do really creative things with our video content.”

Nash also confirmed that the ad revenue stream from this new model would be incremental to the revenue Universal already receives from Meta under the structure of its previous license agreement, first signed in 2017.

On the other hand, Universal seems to be uninterested in joining the user-centric payment model or user-centricjust like you did Warner Music last week when their alliance with SoundCloud was announced, streaming platform that is leading the implementation of this new model.

One of the reasons why the majors are not in favor of this system could be for fear of losing market share, since the models user-centric they generally benefit a large number of independent artists and lower royalties for superstars.

Recall that in the model user-centricthe subscription paid by an individual user will be distributed only among the artists that user listened to, instead of the current prorated model, in which all subscriptions go to the same bag and from there the income is distributed according to the number of reproductions that have every artist on the platform.

The model prorated It then results in the big record companies and big stars receiving money from subscriptions from users who never listen to them or are their fans.

Michael Nash said: “It is clear from the studies that have been done recently, the findings that have been announced, that a large percentage of major artists and music genres could be disadvantaged under a user-centric model.

nash He added: “Step back in terms of our perspective, there is no reason to think that efforts to optimize the streaming model should be reduced to considering only an alternative to the status quo. We believe that the priority for any model adjustment should be to increase overall revenue and foster interest from all artists.

“That means looking beyond model changes to pit one group of artists who benefit against another group of artists who lose. It shouldn’t be a zero-sum situation.”

Another perspective would be to think that, in a model usercentric, a group of artists would not be harming themselves for the benefit of others, rather the previously favored group should never have been favored from the beginning and this model would be a correction and not a deterioration.