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“Fan-powered Royalties” – How SoundCloud May Change Streaming

On March 2nd, SoundCloud dropped a bombshell. They announced that they will be the first streaming service to introduce a new monetisation model, “fan-powered royalties”.

From April 1st 2021, fan-powered royalties will replace their pre-existing means of paying artists who monetise their music. Historically platforms like SoundCloud and its competitors pool money generated by listeners and dish out royalty payments based on which artists have the most plays.

The old model favours the world’s biggest artists and their labels. Because they have more listeners, they draw more from the pool.

Naturally, this is to the detriment of smaller artists, including those we seek to champion through Pastel Wasteland. Without a major label’s publicity machine, independent artists struggle to gain attention. And so, consequentially, the number of streams required to see significant returns on their work.

Here’s how SoundCloud describe their new model:

“Under fan-powered royalties, you get paid based on your fans’ actual listening habits. The more of their time your dedicated fans listen to your music, the more you get paid. This model benefits independent artists.”

I’ve been listening to a lot of Wave recently. Based upon my habits (and as a paid subscriber to SoundCloud), artists like YAMA, murkish and calicry should make more from my listening under the new system.

There have been calls for more equitable models of revenue distribution for some time. Recently, this topic has attracted some serious attention.

In November 2020 the UK Parliament’s Digital, Culture, Media and Sports Committee began an inquiry into the economics of music streaming. Notable figures such as Nadine Shah, Radiohead’s Ed O’Brien and Elbow’s Guy Garvey have appeared before the committee, as has been reported by NME.

Garvey expressed concerns about how inequitable royalty payments could impact music overall. “If musicians can’t afford to pay the rent…we haven’t got tomorrow’s music in place.” It’s reassuring to know that major artists like Garvey recognise not only the personal struggles of smaller artists, but how traditional streaming models could be strangling everyone culturally.

Naturally, The COVID-19 crisis has amped up concerns. O’Brien highlighted how the inability to tour is having a dramatic impact. “Young musicians who rely on live income are really going to struggle” he told the inquiry.

The need for artists to receive fair rewards for their work has never been more crucial. Though it’s worth noting that the true impact of SoundCloud’s new model may not be felt for some time. As The Verge notes:

“This feels experimental. If it’s successful, artists could advocate for more platforms to take this model on, and if it’s not, then the streaming platforms can continue with the status quo, possibly to the detriment of smaller artists.”

I’ve been asked in the past why I prefer using SoundCloud when pulling together Pastel Wasteland’s monthly playlists. The answer is simple: I’ve always found it easier to discover obscure, overlooked, and underrated creators there. It’s comforting then to know that SoundCloud may have just thrown many of them a much-needed lifeline.

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