Historic first as SoundCloud challenge music streaming payment system with “fan-powered royalties”

Image Credit: SoundCloud

In an industry-first, SoundCloud is introducing a user-centric payment system so that artists get paid based on their actual listeners.

SoundCloud has become the first streaming service to switch to a user-centric payment system for independent artists on the platform. In a move that was rumoured last month, from April a “fan-powered royalties” arrangement will see subscriber’s money go only to the artists they listen to.

At the moment royalties on SoundCloud and other streaming services like Spotify are pooled and rights-holders are paid according to their market share of total plays on the platform. User-centric licensing has been peddled as a fairer alternative to this current pro rata streaming payment system. It’s an option that’s been debated in the economics of music streaming government inquiry in the UK.

Critics say the current pro rata model is great for music superstars, but not so great for indie artists and specialist genres like jazz, and that fans of these genres are funding music they never actually stream. According to SoundCloud, “fan-powered” royalties equal a more transparent and fairer system.

Image Credit: SoundCloud

The hope is to level the playing field for some indie artists by linking payments to fandom, meaning fans can directly influence how their favourite artists get paid.

Michael Weissman, Chief Executive Officer of SoundCloud, said: “Many in the industry have wanted this for years. We are excited to be the ones to bring this to market to better support independent artists. SoundCloud is uniquely positioned to offer this transformative new model due to the powerful connection between artists and fans that takes place on our platform.

“As the only direct-to-consumer music streaming platform and next generation artist services company, the launch of fan-powered royalties represents a significant move in SoundCloud’s strategic direction to elevate, grow and create new opportunities directly with independent artists.”

Once it kicks in on April 1st, SoundCloud’s move will benefit nearly 100,000 independent artists who monetise directly through SoundCloud Premier, Repost Select or Repost by SoundCloud.

Learn more about the new system on SoundCloud’s microsite.

I write about music for RouteNote, sharing fun stuff, news, and tips and tricks for musicians and producers. Also a saxophonist and hater of marmalade.

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