Music app

SoundCloud to be the first music app with ‘fan-driven’ artist payments – Science & Tech

Eric Randolph (Agence France Presse)

Paris, France ●
Wed Mar 3, 2021

2021-03-03
09:22
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Science and technology
music, fans, payment, Spotify, SoundCloud, royalty
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SoundCloud announced on Tuesday that it will become the first streaming service to start directing subscription fees only to the artists they listen to, a move hailed by musicians pushing for fairer compensation.

Right now, streaming services like Spotify, Deezer, and Apple put royalty payments in a big pot and split them out based on which artists have the most global plays.

Many artists and unions say this system is grossly unfair, giving a huge slice of the pie to mega-stars like Drake and Ariana Grande, and leaving next to nothing for musicians lower in the hierarchy.

This means that many fans of more specialized artists and genres fund music they never actually listen to.

Instead, starting April 1, SoundCloud will begin directing the royalties owed by each subscriber only to the artists they stream.

“Many in the industry have wanted it for years. We’re excited to be the ones bringing it to market to better support independent artists,” Michael Weissman, CEO of SoundCloud, said in a statement.

The company said the new payment system – known as the “fan-generated royalties” or “user-centric model” – would allow listeners to empower listeners and encourage greater diversity in musical styles.

“Artists are now better equipped to develop their careers by forging deeper bonds with their most dedicated fans,” the statement said. “Fans can directly influence how their favorite artists are paid.”

The majors are believed to have resisted such a move, in part because the current system allows them to generate huge profits from a relatively small number of huge stars.

A study by France’s National Music Center (CNM) earlier this year found that 10 percent of all Spotify and Deezer revenue goes to just 10 artists at the top.

This has allowed the majors to amass record revenues over the past year, just as most musicians have been plunged into crisis by canceled tours due to the pandemic.

Earlier this year, label bosses told a UK parliamentary committee investigating the streaming economy that it might be too complicated for platforms to switch to fan-based royalty payments.

But SoundCloud, which has been testing the new model for months, said that was exactly wrong – that its computer calculations only took 20 minutes under the new model, compared to 23 hours under the old one.

“The most important point to take away from the SoundCloud data is that none of the previous modeling has been accurate, that when you actually run a user-centric system, the rewards for artists who have an audience are dramatically improved. “said Crispin Hunt, president of the British Ivors Academy, which has led a campaign to” fix streaming “.

“This proves the value distortion that the existing model offers,” he said.

“Interesting initiative”

The CNM study, which only used data from Spotify and Deezer, found that the switch to fan-based royalties would only make a slight difference to the earnings of small artists – taking an estimated 4.5 million dollars. ‘euros on the top 10 but distributing it very finely around the lower levels.

However, SoundCloud has found it to make a significant difference. Taking the example of an artist with 124,000 subscribers, he said he would see a royalty increase from $ 120 to $ 600 per month.

He said the overall effect was that 90 percent of royalty payments would now be generated by 90 percent of listeners, rather than just 40 percent of listeners under the existing model.

CNM president Jean-Philippe Thiellay said it was “an interesting initiative”.

“Things are moving a lot in the world of streaming. That’s a good thing. We’ll have to see what it does for artists.”

SoundCloud said its positive data could be related to the special nature of its users, who tend to be “younger and much more active.”

It was launched in Berlin in 2007 as a sort of YouTube for music, allowing anyone to upload its music, from scrappy garage band covers to dubstep DJ sets.

This made it hugely popular, with some 175 million users in 2019, but it struggled to generate revenue and ran into legal issues due to the number of unauthorized remixes and covers on the site.

In 2016, it changed strategy by signing agreements with the majors to offer a premium service with a catalog similar to those of its competitors, but it remained far from the customer numbers of Spotify, Amazon and Deezer.



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