SoundCloud is set to be the first major streaming service to roll out “fan-powered royalties”, which will direct user subscription fees toward the artists they listen to. The new payout model will be implemented on 1 April 2021.
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Under this new model, each listener’s subscription or advertising revenue is distributed among the artists that they listen to. The old model, in comparison, pools money from fans before paying out to artists based on their share of total streams.
SoundCloud claims that the “fan-powered model” is “more equitable and transparent”, and it benefits independent artists more so than big stars.
“Many in the industry have wanted this for years,” said SoundCloud’s CEO Michael Weissman in a statement. “We are excited to be the ones to bring this to market to better support independent artists.”
He continued: “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.”
Currently, most major streaming platforms adopt a pro-rata payout model, in which subscription revenue is pooled together and distributed to artists based on play counts. The model has been criticised by some for offering major artists, with a global fan base, an unfair advantage over independents with a small but loyal following.
A 2020 report from Rolling Stone, using figures from Alpha Data, showed that 90 per cent of music streams could be attributed to just the top 1 per cent of artists, or a group of roughly 16,000.
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