SoundCloud has become the first streaming service to pay artists based on their actual audience size. Musicians on streaming platforms earn very little. Therefore, for some time now, artists from all over the world have officially demanded that Spotify, Tidal and other streaming giants be more honest in the calculation of fees.
To illustrate the scale of the problem, just enter the numbers: Spotify pays the team 0.004 US cents per play, YouTube pays 0.00069 US cents per view. Other streaming services are no better – Apple Music pays 0.007 cents and Tidal pays 0.012 cents. It turns out that for a million views of one song, a group or individual creator receives some … 4,000 dollars from Spotify. It doesn’t help that, according to research by analytics firm Alpha Data, 90% of the music played on Spotify comes from just 1% of artists, making it virtually the only “elite” who make any meaningful money from streaming.
SoundCloud is reaching out to creators and wants to really help them. A “Fan Royalties” system that means nothing less and nothing more, just that subscription fees or ad revenue will be fairly and proportionately split between creators who actually listen, rather than ending up with one big pool where the money was then divided among the most popular performers.
This is a real game changer and listening to the needs of musicians who are struggling to make money during the pandemic. The changes will primarily affect independent artists, that is, those who most need support. Until now, it has been the case that, for example, Spotify counted how many streams took place in a particular country, and then determined how much of these streams were directed directly to a particular creator.
Smaller artists, without sufficient coverage, earned the least because they represented a much smaller proportion of the total streams. The model proposed by SoundCloud reverses this situation.
Time will also tell if other streaming platforms are willing to follow the path set by SoundCloud or are willing to follow the current rules and simply make more money.
As it currently stands, SoundCloud subscription revenue is pooled and distributed to the artists with the most views.
“Direct pay” models are gaining momentum as artists struggle to catch up with canceled tours and live performances. Late last year, SoundCloud announced that traffic to the site had increased by as much as 37% compared to 2020.
The SoundCloud website, founded in 2007, was created primarily for musicians to share their creations with other users of the website. Later, the platform evolved into an extremely dynamic publishing tool. Today on the site we can find profiles of countless artists, record companies and promoters.
Special achievements became the property of SoundCloud during the global pandemic, when almost the entire music industry was forced to go online because it was not possible to conduct live performances in front of the audience. By offering better royalty terms, the streaming music service has attracted many new artists and significantly increased the amount of licensed music in its already vast library.