SoundCloud has shared results from their new user powered royalty system which was unveiled in March. The “fan-powered” model allocates the revenue from a listener’s subscription or advertising revenue directly to the artists who that listener is listening to in a given period of time. This is distinct from the current model used by streaming services such as Spotify, which pools the total revenue and divides it amongst artists. SoundCloud’s new model is exclusively available to its near 100,000 independent artists who use the streaming service and monetise their content exclusively via SoundCloud, while artists signed to labels are subject to existing licensing deals as per their label.
Data on the plan was collated by way of a collaboration with UK trip-hop and psych-rock outfit Portishead, who made a track that was only previously available as a music video available to stream on SoundCloud. Since being uploaded in early July, Portishead’s remix of ABBA’s SOS earned more than six times the revenue it would have under the traditional royalty model. This represents a near 500% increase in revenue. All proceeds from the track were donated to charity.
A recent study supported by Rolling Stone investigated the earnings of artists on platforms such as Spotify, revealing that the most streamed artists on the platform had earned less than $1 million dollars over the course of last year. This is due to the $1.5 billion dollars from Spotify’s total subscription and advertising revenue being divided between 57,000 artists. In this respect the user-driven model could allow for fairer distribution of revenue amongst artists, while also giving insight into the listening habits of their audiences. In a statement from SoundCloud a representative said, “The model is tracking as expected and the Portishead stat is a strong confirmation of the model’s design; fan engagement is driving meaningful revenue.” More data on the full effect of the new system is expected in the coming months.
