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SoundCloud to Launch “Fan-Powered” Royalty Payment Model

Each listener's subscription or advertising revenue will go directly to the artist being played

soundcloud fan-powered royalty payment model
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    SoundCloud is putting artists’ revenue in the hands of their fans. Today, the streaming platform announced a new royalty payment system in which each listener’s subscription or advertising revenue is distributed among the artists to which they listen, rather than being pooled to every artist of the platform.

    The music streaming service says the “fan-powered royalties” model “levels the playing field for independent artists by tying payouts to fandom” and claims the system will allow artists to grow a deeper connection with their most dedicated fans, and give those fans the opportunity to “directly influence how their favorite artists are paid.” SoundCloud adds the move was inspired by feedback from independent artists.

    Michael Weissman, Chief Executive Officer of SoundCloud, issued a statement about the new royalty system:

    “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.”

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    Distributing revenue directly to artists based on their listeners solves one of the sticking points of the traditional “pro rata” model. As Music Business Worldwide reports, critics point out pooling all royalties on services like Apple Music, Spotify, and previously, SoundCloud leads to part of a subscriber’s fee being paid to artists whose music to which they haven’t listened. It also motivates musicians to game the system in order to rack up the most repeated streams. Some artists, like Justin Bieber, have even posted guides for manipulating streaming numbers.

    Ahead of the launch of fan-powered royalties on April 1st, SoundCloud has created a microsite further touting the new model’s benefits. The website is positioned as an artist education campaign, with tips for helping musicians grow their careers.

    While SoundCloud furthers its reputation as an artist-friendly platform, Spotify is focused on expanding its market domination. The company recently announced a new hi-fi audio tier and its expansion into 80 new markets.

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    Editor’s Note: Here at Consequence, we’re doing our part to support independent musicians by donating 50% of all proceeds from Consequence Shop to artists and venues in their recovery efforts. Pick up a T-shirt, hoodie, hat, or even CBD and know you’re helping to protect live music.

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