SoundCloud’s new Fan-Powered Royalties increase artist payments by 500%

Image Credit: SoundCloud

A song by Portishead has earned the band six times more than it would have without the new “Fan-Powered” payment system, according to SoundCloud.

The streaming performance of a Portishead song is the first indicator of whether or not SoundCloud’s new fan-powered royalties work – and the platform says it’s a success for the artist. Plays of the track apparently earned Portishead six times more than what would have been generated under a pro-rata model.

Confused? Fan-powered royalties are SoundCloud’s new royalties system which means that payments go from users to the artists they’ve actually been listening to, as opposed to a big pool that is split according to percentages of plays – as in the case of the “pro-rata” system of the likes of Spotify.

Starting in April, SoundCloud rolled out fan-powered royalties to the 100,000 independent artists who monetise directly with SoundCloud. We explored the logistics of the new venture here.

Now SoundCloud says it has proof the system works for artists. The Portishead song in question is a cover of ABBA track “SOS,” and was exclusively released on SoundCloud at the beginning of July. The song had previously only existed as a music video.

Speaking to Pitchfork, SoundCloud said: “The model is tracking as expected and the Portishead stat is a strong confirmation of the model’s design – fan engagement is driving meaningful revenue.”

The statistics are based on streaming data that stretches under a month, and more details have not been revealed. SoundCloud said: “Full aggregation of market-live payout data is pending over the coming months.”

Supporters say that user-centric payment models like fan-powered royalties will boost revenue for artists below the superstar tier, which the results of “SOS” seem to confirm. If it works, fans of bands in genres outside the charts will know their money is going towards supporting their favourite artists, and more niche bands on streaming services would have the chance to break through the noise of the mainstream.

When you distribute your music with RouteNote we help you monetise your music on SoundCloud for free. Find out more here.

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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