In a time when everyone is arguing over streaming royalties, Soundcloud offers a forward-thinking solution that fans and artists love.
The problem with music is not the access that streaming allows but the deals made by those controlling streaming to minimize what they pay artists. For example, you give Spotify $10 a month to stream as much music as possible. Spotify, in turn, takes that $10 and takes a cut for themselves before dividing the remaining money between every artist you stream, right?
Wrong.
Calculating streaming royalties is no easy feat. Each platform has a specific formula, and no two systems are alike. Spotify may pay $0.004 per stream one day but $0.006 another, and there is no way to know which day has what rate until they’re already underway.
But Soundcloud has a different approach. Starting in 2021, Soundcloud began using a fan-powered method for calculating music streaming royalties. Whenever someone pays Soundcloud for streaming, that money is divided among the artists that person listens to during their subscription period. In other words, if you give Soundcloud $10 a month and only listen to two artists, each artist gets half of your total subscription.
To celebrate one year of their fan-powered platform, SoundCloud is launching ‘Fan-Powered Friday – a one-day event on Friday, April 29th that invites fans to stream music from their favorite independent artists all day long, and SoundCloud will double the artist’s payout — matching 100% of the revenue earned that day.
Think about that for a second. Soundcloud will match every cent earned by artists on its platform this Friday, April 29. Such an undertaking would be crazy for any label to attempt, let alone a streaming service boasting thousands of artists. Nothing like this has been attempted at such scale previously, except for Bandcamp Fridays, and even that isn’t a far comparison.
In addition to announcing Fan-Powered Friday, Soundcloud shared several data insights from the first year of their new royalties system:
- On average, independent artists earn 60% more through Fan-Powered Royalties v. the traditional pro-rata model
- Communities are feeling the love from fans: artists from scenes like Tribal House and Neo-Soul, and the collective Soulection, earned 2X more
- Fans are making an impact by supporting the artists they love: there was a 97% increase in fans contributing more than $5 to a single artist
- Fan-Powered Royalties contributed to the growth of the number of independent artists monetizing on SoundCloud by 30% (March 2021-present)
What remains to be seen is whether or not another streaming service will follow Soundcloud’s lead and offer fan-powered royalties. Send us a tweet and let us know your thoughts.
