SoundCloud recently revealed that beginning April 1st, a new “fan-powered royalties” plan will roll out. This means that fans and listeners will have a direct impact on their favorite artists getting paid. Currently, streaming services like Spotify pool together subscriptions of users and pay artists based on their number of streams. Let’s say that you for instance spend all your time listening to SiR. If you think your money is going towards the artist—you thought wrong. So, SoundCloud’s new royalty plan is really a game-changer in the world of streaming.
How it works
According to SoundCloud, artists get paid based on their “fans’ actual listening habits.” Therefore, the more fans listen, the more artists get paid. With this new plan, if users spend all their time listening to a certain artist, their entire subscription would go directly to that artist. This, in turn, allows for independent artists to earn more than if their audiences’ subscriptions were pooled. Based on SoundCloud’s announcement, fan-powered royalties work based on three factors: how long a fan listens to an artist “relative to all of their listening time in a given month,” the number of ads a fan has consumed, and if they are subscribed to SoundCloud Go+ (paid subscription). However, do note that SoundCloud’s new royalty plan does not apply to everyone.
While the new royalty plan is definitely beneficial for independent artists, it does have certain qualifications. For one, artists must participate in one of SoundCloud’s monetization programs: SoundCloud Premier, Repost By SoundCloud and Repost Select. This means that artists who are utilizing the platform for free will not be able to earn money from fan-powered royalties.
Undoubtedly, SoundCloud’s new fan-powered royalties plan is a game changer in the world of streaming. Particularly because platforms like Spotify or Apple Music pool together the subscriptions of users and distribute money based on streams. This creates an insanely uneven distribution of payments that as SoundCloud notes, “mostly benefits mega stars.” So, despite the platform’s new royalty plan only profiting those enrolled in the three monetization plans, it nonetheless is a huge step forward in the realm of music streaming.