User-centric payments in streaming, where monthly payments get split up to exactly what you listened to is a great idea, but there’s another model we developed that could work even better for all parties. I call it a Facilitator model, or user-based licensing. #brokenrecord 
We waste hundreds of millions in existing/potential revenue through the process of licensing platforms like Spotify. And existing models means we also make it impossible for any other player to compete unless they have massive capitalization. Let’s examine our facilitator model
In the tech world of cloud based services, many of the services you use as a consumer are actually provided by a back end cloud-based solutions provider that the developer users to build some kit on & repackage those services in a fashion that is useful for their platform & you.
The developer doesn’t have immensely complex licensing from multiple parties to be able to build on these services & grant the result to you. Their model is simple...do you have a credit card? Yes...great...let’s do business. You pay me and don’t violate my terms and we’re cool.
You can bring this same simplicity to music streaming platforms which can maximize revenue, cut costs massively, and change the antagonistic developer/rights owner dynamic. And potentially, there’s even more money in it.
It is entirely possible to create kit that provides platforms like Spotify and others the ability to onboard users, licence them for music consumption, and then simply act as a facilitator or delivery mechanism for music, but the licence is rights owner -> listener.
Instead of constantly fighting a battle with platforms to negotiate rights and rates, the music is provided at fees set by rights owners to fans that is at a consistent rate across all platforms, and the data collected on use is also known to the rights owners.
Because use of music is known & the rates are consistent, rights owners know what to expect from platforms, & yes they can adjust their rates for different areas of the world. As for payments, it is based on how much you consume as a fan and the $ goes direct to what you consume.
Billing is still handled by platforms, but now they are charging for their services, plus for the music consumption, but there is no pot to share. So for example, Spotify charges $2-$3 a month for making great music tools, and the rest of your bill is what you used.
The rates for consumption aren’t a flat monthly fee, but charged similarly to how we pay utilities, you pay for what you use. The rate is not only fair, there’s no added licensing bs to eat up the revenue for artists. You get a fair price as a fan to consume as much as you want.
Without the licensing overhead, if Spotify was just charging for having the best music platform/tools, at their current premium user base in USA/UK, they could be generating $360M a month, with no licensing costs. Now let’s look at the fans costs.
At the high end of the streaming spectrum, let’s put the fan at $.01 per listen & an average of 25 hours per month. Looking at an average 4min song, that works out monthly to $3.75, combined with the service fee a total of $6.75 for the month. Heavy users pay more. #napkinmath
Now while $3.75 doesn’t sound like a lot, what we’re not taking into consideration is that some people will pay a higher monthly rate for higher music consumption, but we’ve also cut out all the waste in the system where money is lost. The $3.75 goes directly to the creators.
Currently Spotify pays around 75% of its revenue to rights owners, leaving it $2.50 on $9.99, but in this model Spotify clears $3 on $6.75, and no licensing costs, making it a wildly profitable enterprise without the animosity between it and rights owners.
In this model, rights owners in the USA and Europe clear nearly $5B or more per year going to the parties that actually earned it, not a pot divvied up based on popularity. There is no pot. Now start adding in other platforms, like Apple...
While this is a guess based on some known numbers, the Spotify + Apple revenue from streaming in this model would generate upwards of $8-$10B a year in revenue for creators. That’s just 2 platforms in 2 markets. Now we’re starting to get somewhere.
The other benefit is there’s no race to the bottom on trials or deals. That comes from Spotify’s monthly fee, not the music, because the catalogue is the same, the only thing the fan is trying is the service. So you pay for music no matter where you go, and the rate is the same.
You could easily build this. There’s no technical limitations here and we’ve already done some of this work with Origen.is, but the issue is the WILL to want to do it, and that means you need majors and publishers, as well as platforms to sign on.
The problem with convincing the majors and platforms to try something new is that they like the current shared pot model. Additionally, if you eliminate the licensing bullshit, other players could enter the space, which Spotify doesn’t want. But then we’d see real innovation...
For example, if licensing of platforms goes bye bye, then we could see a whole new type of music streaming solutions where we have highly specialized and curated solutions, where you pay $1 a month and then whatever you consume. You could subscribe to 2-3 unique platforms.
There’s nothing stopping this type of innovation from occurring. I mean we need to adapt to changes in tech and markets, but it does take a coordinated effort that a lot of powers-that-be will likely never allow. Not to mention none of them can really work together (see GRD). 🤷♂️
Lastly, the music industry has more or less been taken over from A&R/marketing folks, to lawyers who want the system to be complicated. You start simplifying the music biz, you stop needing all the lawyers. And the job of a lawyer is always start off by saying “no” to anything.
