Blame Taylor Swift, YouTube for low artist pay from streaming: Deezer CEO

The future of online streaming

Pop star Taylor Swift and Google's YouTube are behind the continued complaints from music artists who believe they are not being paid enough by streaming services, the chief executive of Deezer told CNBC on Tuesday.

Deezer is a French music streaming service that has about 6 million subscribers and offers a paid 9.99 euro ($11.30) a month subscription plan.

Streaming services have been hit with controversy over the amount they pay artists. But Deezer's founder said that it's actually video platforms like YouTube which are responsible for the small remuneration that artists receive.

"When you look at services like YouTube, which has a massive distribution, (it) pays less than we are even paying to the music labels in terms of revenues. There are other issues we need to fix first in order to help the artist," Hans-Holger Albrecht, CEO of Deezer, told CNBC.

"I think we should close the value gap between YouTube and what they pay and us … If Taylor Swift doesn't want to go on streaming but stays on YouTube, it doesn't help us."

Albrecht was referring to the 2014 incident in which pop megastar Taylor Swift, pulled her albums from rival service Spotify. Her music is still on Apple Music, however.

Google did not immediately respond to a CNBC request for comment.

Google defends payouts

Music streaming revenues in the U.S. grew 29 percent year-on-year in 2015 hitting $2.4 billion, according to the Recording Industry Association of America (RIAA).

Streaming revenues made up 34 percent of total U.S. music industry revenues in 2015, up from 27 percent in 2014, with paid subscription services like Spotify and Apple Music the fastest-growing portion of the market.

But another part of RIAA's report shows that the number of streams on ad-supported services, such as YouTube, rose 63 percent in 2014 while revenues rose 34 percent. This gap widening in 2015 with the number of streams rising 101 percent, but revenues only increasing 31 percent.

"In 2015, fans listened to hundreds of billions of audio and video music streams through on-demand ad-supported digital services like YouTube, but revenues from such services have been meager — far less than other kinds of music services," Cary Sherman, chairman and CEO of RIAA, said in a blog post in March.

"This is why we, and so many of our music community brethren, feel that some technology giants have been enriching themselves at the expense of the people who actually create the music."

And just last week, YouTube was in the crosshairs of the European Commission with digital chief Andrus Ansip urging Google to give more revenues to artists. Ansip claimed that despite YouTube's 1 billion users, it generates about 600 million euros a year for the music industry. He added that Spotify generates 1.6 billion euros a year.

But Google hit back at the claims saying that it pays more than what Ansip suggested.

"To date, Google has paid out over $3 billion to the music industry — and that number is growing significantly year on year. Only about 20 percent of people are historically willing to pay for music. YouTube is helping artists and labels monetize the remaining 80 percent that were not previously monetized," Google said in a statement to the Financial Times last week.

Streaming the ‘savior’

Bradley Kanaris | Getty Images

But Albrecht said that streaming services like his can be a boost for the music industry.

"I think for the artists themselves, I think the opportunity is huge when it comes to streaming because …you have much more markets you can penetrate than the old days, " Albrecht said.

"The second point of course you get a steady stream of revenue. It's not the first four weeks like an artist when they sell a record…and we just at the beginning of a big development. So I think streaming will be the savior of this."

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