Soundcloud has announced they are introducing fan-powered royalties where money made from listeners goes directly to the artists they listen to.

In a significant shakeup to the streaming sector, SoundCloud says it will start directing money from subscribers to the artists they actually listen to. Musicians campaigning for fairer pay from the streaming platforms have welcomed the decision.

This has often been a point of significant contention for artists and fans alike as the current model on Spotify leaves so much to be desired. Typically major streaming services such as Spotify, Deezer and Apple operate where royalty payments are pooled together and dished out based on which artists have the most global pays.

In practice, therefore, if next month Spotify were to distribute $100 million to artists and Beyonce accounted for 2% of the streams then she (or whoever owns the right to her music if we’re being precise) would receive $2 million. 

That means that 2% of our Robert Hood fan’s subscription would go to the rights holders of Beyonce’s music, even if they’ve never actually listened to her. So, even if you only ever used Spotify to play Robert Hood, huge amounts of your subscription would be paid to the world’s most popular pop stars. Its long been harangued as an unfair system. 

“Many in the industry have wanted this for years,” said Michael Weissman, SoundCloud’s chief executive officer. “We are excited to be the ones to bring this to market to better support independent artists.”

Known as “fan-powered royalties” or a “user-centric model”, the new system should empower listeners and encourage greater diversity in musical styles.

“Artists are now better equipped to grow their careers by forging deeper connections with their most dedicated fans,” Weissman said. “Fans can directly influence how their favorite artists are paid.”

Critics of the system have typically been major record labels as the current system is so heavily weighted in their favour and is top-heavy with some of the biggest stars in the world accounting for the majority of their profits. A study by France’s Centre National de la Musique earlier this year found that 10% of all revenues from Spotify and Deezer go to just 10 artists.

This issue has been brought in front of a British parliamentary commission investigating the streaming economy last month and how fair it is for musicians. During the hearing, it was mentioned that moving to the SoundCloud fan based royalty payments would be ‘too complicated’. SoundCloud, long maligned for poor tech especially their app, responded swiftly to denounce that stating their computing calculations took just 20 mins.

3rd March, 2021

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