*This article may contain links to affiliate products & services. We have reviewed these services to try and ensure the highest quality recommendations*
Written by Ramsey Brown
There has been an ongoing debate within the music industry between streaming services and artists who feel they are unfairly compensated from these platforms. While streaming continues to evolve at an extraordinary rate, the way artists get paid through streaming services has seen little to no change - that is until now.
Effective on April 1st, 2021, Soundcloud will launch their new 'Fan-Powered Royalties' payout system which is set to change the music streaming game and how independent artists make money.
Fan-powered royalties are a new model of payouts that are influenced entirely by the artists fanbase. With this industry-first system, emerging artist’s revenue will be driven by their audience's dedication and listening habits. This will empower fans to directly support the artists they love and encourage the rise of new genres and independent artists.
Under the old model, all streaming royalties go into a giant pool at the end of each payment period after which recorded music rights-holders are paid according to their market share of total plays across the platform. This ‘pro-rated’ system, obviously enough, benefits major superstars and more commercial genres.
All of the major streaming services use this pro-rated system and musicians have been trying to fight it for years.
The new model is a more equitable and transparent way for independent artists who monetize directly with SoundCloud to get paid. The more fans listen on SoundCloud, and listen to your music, the more you get paid.
Image via SoundCloud.com
Now, with the new 'fan-powered royalties' system, SoundCloud subscriber’s subscription fee or advertising revenue will be divided up among the artists they actually listen to rather than going to a big pot and being split up among the platform’s most popular artists.
The total amount of money generated by a fan for the artists they listen to is based on a three factors:
Under fan-powered royalties, the more time fans spend listening to your music, the more the artist gets paid. This move is set to level the playing field for independent artists by tying payouts to fandom. Thus, a more equitable and transparent way for emerging and independent artists to earn money on SoundCloud.
To kick off this new system, SoundCloud will be running two streaming royalty calculators, keeping the majority of it’s artists paid through the previous ‘pro-rata’ model, and allowing nearly 100,000 indie artists to get paid via the new user-centric/'fan-powered' model.
The company provided two examples of how they estimate the new model will work. One where an artist's monthly revenues jumped from $120 to $600 a month, and a separate artist's monthly revenues increased by 217 percent.
Image via SoundCloud.com
Independent artists who monetize directly with SoundCloud are eligible for fan-powered royalties. These artists include Pro Unlimited subscribers in the Premier Program, Repost by SoundCloud subscribers and members of Repost Select:
SoundCloud Premier: Premier is the monetization program for Pro Unlimited subscribers. Artists will be notified and prompted to join once they become eligible to monetize. Learn more about eligibility requirements here.
Repost by SoundCloud: Repost by SoundCloud is for artists who want to reach fans everywhere by distributing their music to every major music service. There are no eligibility requirements to monetize with Repost by SoundCloud. You can subscribe to Repost by SoundCloud here.
Repost Select: While there are no eligibility requirements to monetize with Repost Select, it’s a program open to select Repost by SoundCloud subscribers via application or invitation only. Click here to apply or learn more.
Soundcloud's CEO Michael Weissman says, “As the only direct-to-consumer music streaming platform and next generation artist services company, the launch of fan-powered royalties represents a significant move in SoundCloud’s strategic direction to elevate, grow and create new opportunities directly with 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."
For now, this new concept has yet to be commented on by the three major label companies, Sony, Warner, and Universal, but Soundcloud believes at its most basic and fundamental level, user-centric streaming is the right thing to do.
In short, this new royalty system won't apply to everyone on SoundCloud, only around a fifth of it’s users will even become eligible. Though this user-centric royalty distribution won’t immediately change the music industry at large, it is an important milestone that the company hopes will be adopted by bigger streaming companies in the future.
If you are an artist looking to grow your Soundcloud followers and monetize off of streaming, but do not qualify for their new fan-based royalty system, Omari MC offers services that can be of assistance to you. Our trained staff specializes in developing custom marketing and promotion campaigns for artists of all different sizes and budgets.
If you are ready to take your music career to the next level, contact Omari MC today.
When your song is ready to go, it's time to start promoting it to potential fans! Omari has the best organic promotion services money can buy. With packages for Spotify, Apple Music, Instagram, and YouTube, we will get your music the traffic and attention it deserves! Click below for more information.
Join the No-Nonsense Music Marketing Newsletter to get our advertising blueprint that helped us grow our music business to over 7 figures a year!