SoundCloud is to start paying money from subscribers directly to the artist they’re listening to, in “fan-powered” royalties system. Full details here!

On Tuesday SoundCloud announced that it would become the first streaming service to use what it’s calling a “fan-powered” royalties system. This is a move that has been long awaited by music fans and artists alike, and marks a welcome change to the way companies pay artists.

Services like Spotify, Deezer and Apple currently pool royalty payments generated by streams into a collective pot. These are then distributed between artists who have the highest number of plays. This system has been widely criticised, as it fails to fairly support new artists and those who make up a niche corner of the music industry. Instead, royalties go into the pockets of already wealthy and established artists, funding music with money from people who may have never even listened to those artists.

From the 1st April SoundCloud will begin using subscribers’ money to pay only the artists they actually listen to. CEO Michael Weissman has said:

Many in the industry have wanted this for years. We are excited to be the ones to bring this to market to better support independent artists. SoundCloud is uniquely positioned to offer this transformative new model due to the powerful connection between artists and fans that takes place on our platform.

He went on to explain that this signposts an exciting change in the way SoundCloud will interact with independent artists, hoping it will help to “elevate, grow and create new opportunities”. With the loss of live performances due to the pandemic, and attempts to reintroduce gigs moving slowly, earning potential has been largely limited to music streaming royalties. Now, fans will have the direct power to support their favourite artists via streaming, enabling them to grow and develop their careers.

This user-centric model has been dubbed too complicated to calculate by label bosses. However, SoundCloud refuted this, saying that under the new model computing calculations took just 20 minutes. This is opposed to the 23 hours it takes to calculate using the current framework.

Should this switch go well, it could put pressure on other services to adopt a similar system. As the largest music subscription service in the world, Spotify has come under fire for not paying artists fairly. With the recorded music industry growing year-on-year, it’s high time the question of “how?” is properly addressed.