The year is 2023. After intensive lobbying, the governments of the US, the EU, and Britain have decreed changes to the way music streaming services pay out artists. Instead of pooling all of users’ revenue together and distributing it pro-rata based on the number of streams, the money will now be divided based on listening-share per user. That means, if a listener’s playback is composed for 50% of one artistâs music, that artist will get 50% of the revenue that specific user generated.
With new economics, the game changes – and so does the way we measure success.
Why user-centric is a paradigm shift beyond the economics
A common argument against the user-centric model is that it doesn’t necessarily bring more money in, would be costly to transition to, and might not end up in radically different sums at the bottom of royalty statements. The problem with the studies that these arguments are based on is that the studies took data generated by the current status quo of streaming and ran it through a new system. A different system means different incentives and would have led to a different data set.
More importantly, it changes the overall game as Spotify’s then-chief economist Will Page pointed out in 2018:
âUnder âpro rata,â an artist is less concerned with diversity and will simply prefer the platform whose users stream their music most. Under âuser-centric,â artists prefer streaming platforms where their listeners exhibit less diversity in taste.â
The game in user-centric streaming is to make sure your listeners spend as much time on you as possible. As an artist, you want to make sure theyâre a) paying for a subscription, and b) listening to you primarily. What you donât care about is their exact number of listens.
A familiar metric will stay just as important: your number of monthly listeners. What will become more important, is a new metric: average listening-share per user (ALPU).
ALPU: average listening-share per user
Fast-forward to imaginary 2023 again. Music marketeers are obsessed with ALPU, which they can monitor in the dashboards of popular streaming services. Some of the tactics they use to increase ALPU are:
- Getting fans to turn disable Autoplay features on streaming services, since itâs better if playback stops rather than moves on to another artist.
- Prioritizing profile-focused platforms over catalogue & discovery-focused platforms. While getting discovered is still important, the money is made when you get people to stream on high-ALPU platforms.
- Move fast on new platforms, since being first on a new service is a massive advantage for ALPU due to the fact that thereâs not much else to stream yet.
It would slowly lead to a landscape that looks more like that of newsletters and Patreon communities in the sense that theyâre isolated and thereâs not much discovery between them. As a matter of fact, Patreon stated theyâre not a discovery platform up until a recent funding round. Their now-deleted blog post was cached by the Wayback Machine and can still be read. In it, their then-SVP Product Wyatt Jenkins said:
âBecause weâre not focused on discovery, weâre not constantly trying to recommend new creators to your fans. It takes time to build an audience, for a fan to become passionate enough about you as a creator to become a paying patron. We respect that relationship. Weâre not here to market other creators to your patrons.â
While a user-centric payments landscape doesnât exist yet for music steaming, itâs useful to think about what it would look like. While I think something healthy can flourish from such a landscape, itâs not a cure-all for todayâs most important problems. For example, a shift to user-centric is among the demands in the Justice at Spotify campaign by the Union of Musicians and Allied Workers, because they claim that pro-rata âputs artists in competition with each other.â I suspect a user-centric economy would make that competition much more fierce.
Finally, ALPU already makes for a useful thought experiment at present. Before you get to revenue, you have to garner attention. Whatâs your attention share of your most dedicated fans? How do you stay top of mind and have fans checking in on you, so you can get your latest music, merch, or livestream tickets under the eyes and into their shopping carts? Shifting to user-centric would mean the streaming landscape is more closely aligned with the same metrics used to build dedicated fan bases.