Popular music streaming platform, SoundCloud, has recently announced a revamping of the way they distribute royalties, which will effectively let listeners pay the artists they listen to directly. Starting on April 1, users who pay for a SoundCloud subscription will have 100% of their subscription fees (after SoundCloud takes their cut) directed exclusively to the artists they listen to.
Prior to this new change, SoundCloud followed other streaming platforms, such as Spotify and Apple Music, with a business model that heavily benefitted major stars, as opposed to independent and upcoming artists:
The way it worked was that the total amount of streams on the service were pooled together, in order to increase ad revenue. Therefore, even if you didn’t stream a certain artist at all, if they received a certain percentage of overall streams on the app, that same percentage of what you paid would go to that artist, increasing their profit.
The new model, which SoundCloud is referring to as “fan-powered royalties,” essentially removes that percentage going to the popular artists you don’t listen to. While stars will still receive their fair share of profits, based on the numbers of streams they get, lesser-known artists will now be fairly compensated, without having to forfeit a percentage of their streams to bigger artists.
Although SoundCloud is nowhere near as popular a streaming service as Apple Music or Spotify, the unveiling of their new royalty system is a big first step in the process of paying artists fairly in the age of streaming platforms.
Because it is so easy to upload music to SoundCloud, many artists publish their first material on the site, making it a breeding ground for young (especially rap) artists looking to get discovered, as well as niche acts who might find it difficult to get signed to a record label.
In the age of music 2.0, where virtually anyone can create and publish their own music, it is extremely important to be celebrating and supporting independent artists. With their new “fan-powered royalties,” SoundCloud is doing just that.
Read more about SoundCloud’s “fan-powered royalties” here.