Soundcloud has announced it is now going to be operating on fan-powered royalty payouts for artists rather than the traditional streaming method.
This will take place on1st April 2021 and the first payout will be on 30th April 2021. Now this is something that the industry has been asking for to help independent artists and personally I think it is a good move in the right direction when looking into the world of royalties.
But what does it all mean?
The Current Model
Most streaming services currently operate on a 'pooling system' that benefits the top major artists.
1) Money is generated from adverts
2) If a user watches an advert or click on it, that revenue will go into a pool of money generated.
3) That money generated will then be split between all artists depending on how many streams they had. e.g. If a fan doesn't listen to Beyonce or Drake they will still be giving some of their advertising revenue to these artists based on the proportion of streams.
See images at SoundCloud’s new, game-changing payout model
The New Model
Under the new user-generated royalties we see that this is adjusted for the benefit of independent artists. The first step is pretty much the same but steps two and three are different.
1) Money is generated from adverts
2) If a user watches an advert or click on it, that revenue will go directly to the artist they listened to.
See images at SoundCloud’s new, game-changing payout model
Please note this will only apply to independent artists and definitely gets my approval for a step in the right direction for streaming services becoming more fair.
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