SoundCloud announced 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 extremely 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-fed royalty” 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 the National Music Center in France earlier this year found that 10 percent of all Spotify and Deezer revenue goes to just 10 artists at the top.
This has allowed major record companies 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 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.
© 2021 AFP