SoundCloud to adopt industry first, user-centric royalty calculations
SoundCloud to adopt industry first, user-centric royalty calculations
As Soundcloud announce they’re introducing user-centric royalty calculations for artists; we ask why has it taken so long, will others follow or is it all just a great exercise by Soundcloud to appear artist-friendly?
Streaming as we know it
Under the current model, all the artist royalty share from subscription revenue each platform generates goes into a kitty that is then paid out to artists based on those artists’ share of total streams on the respective platform. Fan-powered royalties work by the artist being paid based on users' actual listening habits. So, if all you listened to in a month was Mogwai, all of the artist royalty share of your subscription fees for that month would be paid out to Mogwai.
Why is the concept of fan-powered royalties so revolutionary?
Paying to listen to the artist you’re currently streaming sounds pretty obvious, (in fact we would not be surprised to hear that most listeners think this is the case) however Soundcloud are actually introducing something of a revolutionary shift in gear.
“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.”
It’s a leveller for sure - Soundcloud says it will give the artist control and the software’s insights dashboard allows a transparency that has not been seen before - in that the artists can see the fans that are actually contributing to their royalties.
So why is it only Soundcloud doing this?
Other streaming services have resisted the move probably because the current system is simply easier to manage.
Breaking away from this is a concept that has been talked about within the industry for years, with many believing it should have been actioned already.
Merck Mercuriadis, founder and CEO of Hipgnosis Songs Fund said, “What you’re relying on — whether you’re me or an artist — is that you’ve got songs that are of such extraordinary success and such cultural importance that people are going to spin them,” Mercuriadis says. “And when they spin them, you want to get paid for the fact that they’re spinning your record, not get partial payment or your payment diluted by the fact that someone thinks that they’re spinning someone else’s record when they’re really not.”
Clever PR or clever move?
The biggest hurdle in all of this is that the majors are not interested yet. Yes, they’re looking at it and even doing their research, but the truth is, none of them are in a rush to push for it. Perhaps Soundcloud is the catalyst for change that many in the industry believe is fairer and by being the first to adopt it, they may well start the fan powered royalties ball rolling?
So, whilst for the time being, this move from Soundcloud is a great way to show a commitment to the smaller artists and get some traction, in the long run we believe it will show that Soundcloud were actually the smart innovators delivering a level playing field that the streaming industry needed.
