Soundcloud introduces ‘fan-powered royalties’ plan aimed at paying artists more fairly

While it may seem like an obvious solution to many, Soundcloud’s introduction of ‘fan-powered royalties’ – whereby listeners only give money to the artists they’re actually listening to – is quite revolutionary in the world of streaming.

Guest post by James Shotwell of Haulix

Soundcloud is onto something revolutionary in the world of streaming: Give listeners’ money to the artists they listen to and not those they don’t.

Calculating the amount of money an artist is likely to earn from streaming is far more complicated than most would assume. No service, including Spotify and Soundcloud, pays based on stream counts alone, and none offer a consistent royalty rate per stream.

Generally speaking, subscriber money is traditionally placed into a large pool that streaming services then pay to artists by comparing their streams for a month to the total streams on the platform.

Here’s an example: If Taylor Swift gets 5% of all streams on Spotify in June, she and her label will get 5% of your monthly subscription fee, even if you never listened to one of her songs.

Soundcloud has a plan to change this, and it begins with fans.

According to an announcement made on Tuesday, March 2, Soundcloud will soon begin using what it calls a “fan-powered royalty” system to compensate artists on its platform.

Under the new model, if a user paying $10 a month only listens to five artists, those five artists will get an equal split of that $10 — after SoundCloud takes its cut — no matter how many times the user listens to each of them.  

Users paying to support the artists they listen to instead of every artist on a platform may sound like an obvious notion. However, Soundcloud is the first mainstream streaming service to attempt such an effort. Others may follow suit in time, but it seems unlikely to happen unless artists and labels work together to push for change.

Soundcloud’s “fan-powered royalty” system goes into effect on April 1.

James Shotwell is the Director of Customer Engagement at Haulix and host of the company’s podcast, Inside Music. He is also a public speaker known for promoting careers in the entertainment industry, as well as an entertainment journalist with over a decade of experience. His bylines include Rolling Stone, Alternative Press, Substream Magazine, Nu Sound, and Under The Gun Review, among other popular outlets.

MORE: Soundcloud shifts to ‘fan-powered’ royalties but artists must pay to get paid