The debate over music royalties is stuck. Is it time to make the case for ‘completion’?

The music industry has failed to reach consensus on how to transition from the streaming payment model that has prevailed for two decades, despite widespread agreement that the system is due for a remix. A solution that can overcome the common criticisms levied against alternative models is needed to unlock this gridlock.

One such solution, put forward by the economist and author of Pivot, Will Page, is ‘Completion’.

Completion would reward songs that are streamed in their entirety, and punish those that are skipped before they end. The best argument for this approach is not that it overcomes pitfalls of pro-rata, nor that it combats streaming fraud – both of which it does. What makes this proposal sing is that it is practical: the industry can implement it without any of the transitional headaches that other options entail. What’s more, Completion could easily complement further changes, including user- and artist-centric.

Under the pro-rata model, streaming revenues swelled from less than $1 billion in 2012 towards $20 billion by 2023. But agitation is rising. Critics say lighter users subsidise the heavier, and that all streams shouldn’t be worth the same.

Migrating directly to a user- or artist-centric system would bring huge transitional costs. A typical streaming service provider has over 900 contractual agreements, each tied to complex royalty accounting systems for the two main copyrights The best case scenario for successfully renegotiating all of this would be lengthy and expensive; worst case would be audit hell.

Introducing a new system that rewards completion would avoid these costs, because it would expand upon a central mechanism of current royalty accounting: thresholds. Today, for a stream to be compensated, it must surpass two of them. First, it must be played; second, its runtime must exceed 30 seconds.

Implementing a third threshold of a song playing to the end is no more technically complicated than the first two. It’s easy to legally define, removing the risk of auditing disputes. And it fulfils the widespread desire to depart from pro-rata while still allowing more aspirational models to be explored.

The first question to any new proposal is almost always, “Who are the winners, and who are the losers?” This is typically followed by a conclusion that, whatever its merits, the new proposal won’t work because it would create losers. This line of argument is baseless – it neglects the fact that the current system has winners and losers, too, and that even while the system remains constant, those winners and losers change over time.

“Rather than focus on winners and losers, better to ask if a proposed intervention would make what is already fair, fairer? I believe this proposal does just that”, says Will Page.

Nevertheless, if the case for Completion is to be seriously considered by an industry that’s proven to be reluctant to change, it is important to be clear on its strengths, weaknesses, and potential unintended consequences. Page takes each of them in turn for an assuringly thorough spin.

The primary strength of Completion, he writes, is its common sense: when a listener skips a song before it ends, they take action that indicates they value that song less than one they play through to the finish. Rewarding songs according to the listener’s valuation of them is a workable definition of fair.

Another benefit of Completion is that it would help to tackle stream fraud, as those pernicious 31-second stream-farms would die overnight.

The main downside is that Completion may unintentionally favour lean-back listening. But if this is how a listener chooses to listen, it’s questionable whether this criticism holds water. Not to mention, this is hardly different from radio. Page offers new data to show that lean-back triumphs in completion rates, but only just.

He cites his mentor David Safir, who asked, ‘For whom are we defining fairness? The label, the platform, or the consumer?“

“If the consumer opts into a contract for lean-back convenience of listening, who are we to disagree? After all, the consumer is rarely wrong,” argues Page

Unintended consequences of Completion include numerical anomaly, where the completion of pop songs lasting two minutes is worth more than the incompleteness of a six-minute song — although modelling suggests this concern would be misplaced.

Using listening-duration data from Echo Nest, and mapping it to a sample of three months’ worth of consumption of the top 15,000 songs on UK streaming services, analysis from Will Page shows that a modest reduction in the effective revenue share of an incomplete stream – from 55% to 40% – would raise the effective revenue share awarded to a completed stream by three percentage points, to 58%.

What doesn’t change is the amount of payment from streaming services to recorded music rightsholders – this remains fixed (see below).

“I offer a model that allows theory to become practice with simple inputs, variables and outputs. You don’t control the skips, but you do control how they are punished and you can observe the impact on the per stream,” says Page

These figures are directional, but they point toward a workable alternative. The absolute effect is rather small since, somewhat surprisingly, only about 10 percent of streams are skipped. Modeling also reassuringly shows that long songs are completed as often as short ones — marathon runners enter marathons and sprinters enter sprints.

We’ve been stuck for too long. Completion is a way forward.

You can read Will Page’s full proposal for Completion in music royalties through here.

Sam Blake, the author of this article, is a writer and editor based in Brooklyn. His work has appeared in The Economist, NPR, and the Detroit Jewish News among others.Music Business Worldwide