The model might just be a game-changer for the streaming industry.
Amidst the debate surrounding how much artists should be paid for having their work played on streaming services, SoundCloud have today unveiled a new ‘fan-powered’ royalty distribution model that aims to inject the money of its users directly into the pockets of the independent artists they choose to support.
- SoundCloud’s new fan-powered royalty payment model pays independent artists directly for streams accumulated on the platform, as opposed to disproportionately paying artists from a revenue pool.
- The new model will launch on April 1, and is limited to acts who aren’t supported by a major label.
- SoundCloud describe the new model as ‘a more equitable and transparent way for independent artists who monetise directly with SoundCloud to get paid’.
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Who does the new model benefit?
The model, which SoundCloud are claiming to be an industry-first, will be rolled out from April 1, with the new royalty rules only being applicable to independent artists to prohibit acts on major labels from receiving a disproportionate cut.
Upon launch, the fan-powered royalty model will be made available to independent artists who monetise directly with SoundCloud utilising the Pro Unlimited subscription’s Premier Program, as well as Repost by SoundCloud subscribers and members of Repost Select.
SoundCloud describe this as a way to ‘level the playing field so independent artists can compete’, with payouts being based on a fan’s overall listening time ensuring a much more transparent payment model than conventional methods.
How does it work?
In a nutshell, SoundCloud’s new model makes sure that revenue accumulated from users on the platform – based on how much the fans listen to artist relative to their total listening time in a month, as well as how many advertisements they’ve consumed while listening and whether or not they have a paid subscription to SoundCloud Go + – will go straight to the artists they listen to, as opposed to ‘their plays being pooled’ and being distributed unevenly among acts of different tiers.
This method of royalty distribution is drastically different to models favoured by services like Apple Music and Spotify, who designate a portion of advertising and subscription income to artists based on the share of their plays across the platform.
A FAQ published by SoundCloud explaining the new model describes this method as one that ‘mostly benefits megastars’, and denotes that the more fans who listen to the works of an independent artist on SoundCloud will result in them receiving more payment for their streams.
‘Under fan-powered royalties, you get paid based on your fans’ actual listening habits,’ a statement from SoundCloud reads.
‘The more of their time your dedicated fans listen to your music, the more you get paid. This model benefits independent artists.’
Further to that, the payment model should in turn facilitate deeper connections between artists and their listeners, and should alleviate fake plays and bot plays from being counted as official streams.
When does it start?
So far, SoundCloud’s new model is slated to launch on Thursday April 1. Premier artists will receive their first income statement in May 2021, while Repost artists will receive their first statement in June 2021 due to the 45-day and 60-day payment cycles of the two services.
Michael Weissman, CEO of SoundCloud, lauded the launch of the new model in a statement shared today, saying that ‘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.’
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Find out more about the innovative new model via SoundCloud today.