Soundcloud royalties Archives

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.

Soundcloud is onto something revolutionary in the world of streaming: Give listeners’ money to the artists they listen to and not those they don’t.

Calculating the amount of money an artist is likely to earn from streaming is far more complicated than most would assume. No service, including Spotify and Soundcloud, pays based on stream counts alone, and none offer a consistent royalty rate per stream.

Generally speaking, subscriber money is traditionally placed into a large pool that streaming services then pay to artists by comparing their streams for a month to the total streams on the platform.

Here’s an example: If Taylor Swift gets 5% of all streams on Spotify in June, she and her label will get 5% of your monthly subscription fee, even if you never listened to one of her songs.

Soundcloud has a plan to change this, and it begins with fans.

According to an announcement made on Tuesday, March 2, Soundcloud will soon begin using what it calls a “fan-powered royalty” system to compensate artists on its platform.

Under the new model, if a user paying $10 a month only listens to five artists, those five artists will get an equal split of that $10 — after SoundCloud takes its cut — no matter how many times the user listens to each of them.

Users paying to support the artists they listen to instead of every artist on a platform may sound like an obvious notion. However, Soundcloud is the first mainstream streaming service to attempt such an effort. Others may follow suit in time, but it seems unlikely to happen unless artists and labels work together to push for change.

Soundcloud’s “fan-powered royalty” system goes into effect on April 1.