SoundCloud’s new user-centric payment system is revolutionary, but there is a catch

This week SoundCloud announced the brand new way in which they will be paying artists to make streaming royalties fairer for smaller artists with dedicated fans. Sadly not every artist will gain from this.

The new user-centric payment system announced by SoundCloud this week is game changing. Rumoured to be on its way at the start of February, SoundCloud have made huge announcements revealing that yes it is coming – and very soon!

It pays artists out based on the revenue generated by their actual listeners. What this means is that someone paying a £10 subscription who listens to only one artist, all of the streaming revenue pay-out from that £10 goes to that artist.

It is incredible news, particularly for smaller artists and labels with dedicated communities and fans. The previous system, and the one adopted by all major streaming services, means that all streaming revenues go into a large pot and are then distributed based on a percentage of streams amongst all of the song streams in a period.

Does SoundCloud’s new user-centric payment system sound vastly more fair? Absolutely it does, especially if you are an independent artist or record label. SoundCloud’s move into this payment model is pioneering – Deezer have discussed it before but never managed to make the leap – however, sadly not all artists on SoundCloud will be benefitting from the new payment system.

Which artists are eligible for SoundCloud’s fan powered royalties?

The new user-centric payment system will only apply to artists who monetise their music directly with SoundCloud. So eligible artists include Pro Unlimited subscribers in the Premier Program, Repost by SoundCloud subscribers, and members of Repost Select.

It’s a brilliant move and unfortunately it is understandable that they can only provide it for direct distribution. The reason that Deezer haven’t been able to implement the model is that there is that there is sadly still resistance from major labels. Though they have said that they’ve been able to get “the majority of French labels” on board for an initial test in France, it hasn’t yet happened.

Hopefully with SoundCloud leading the way with the first to adopt a UCPS then the flood gates will be opened for others to try it. We know how much it could benefit the independent artists and labels we work with. We now eagerly await to see the results when the new payment system goes live for SoundCloud’s eligible users.

The new system of payments will begin on April 1st next month and eligible Premier artists will receive their first statement in May whilst Repost artists will see their first report in June.

Writing about music, listening to music, and occasionally playing music.

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