In April 2021, SoundCloud launched its industry-first ‘Fan-Powered Royalties’ platform – its own branding of the user-centric streaming payment model.
This method of monetization sees royalties from each individual subscriber’s monthly payment distributed only amongst the artists they listen to.
That’s opposed to the more typical ‘big pot’ or ‘pro rata’ streaming royalties model – adopted by the likes of Spotify – which sees all royalty revenue paid / generated by users centrally pooled by a service, before being shared on the basis of artist market share across an entire platform.
It’s now a year on from SoundCloud’s Fan-Powered Royalties were made available to independent artists who upload / monetize their music directly via SoundCloud. And today (April 25), SoundCloud has revealed a series of updated stats about its payout system’s progress.
These stats include the fact that 135,000 independent artists are now getting paid through Fan-Powered Royalties (FPR). This marks a 30% growth in the volume of artists who have signed up to monetize their music via FPR on the platform since March 2021.
SoundCloud also claims that, on average, independent artists are now earning 60% more through Fan-Powered Royalties than they would have been had they stuck with the traditional pro-rata model.
As mentioned, the pro-rata model sees royalties paid to recorded music rights-holders based on their respective market shares of total plays across the music streaming service.
SoundCloud claims that this system sees “megastars make the most”.
SoundCloud also reports that, since March 2021, 97% of fans on SoundCloud have individually contributed more than $ 5 to “a single artist they love” via Fan-Powered Royalties.
Artists eligible for Fan-Powered Royalties are those indie artists who monetize directly with SoundCloud, including Pro Unlimited subscribers in the Premier Program, Repost by SoundCloud subscribers and members of Repost Select.
To celebrate one full year of operating its Fan-Powered Royalties platform, SoundCloud is launching what it calls, ‘Fan-Powered Friday’, this coming Friday (April 29).
On that day, SoundCloud says that it “invites fans to stream music from their favorite independent artists all day long”. In turn, SoundCloud pledges to double those artists’ royalty payouts – matching 100% of their revenue earned that day.
SoundCloud has previously cited two independent artists as successful case studies for its Fan-Powered royalties system.
By switching those artists, Chevy and Vincent, to a “fan powered” model and away from ‘pro rata’, based on their playcounts at the time, the service estimated that Chevy’s monthly royalties would grow 217%, while Vincent’s would multiply by five , up from $ 120 to $ 600.
In July, Influential British band Portishead released their cover of ABBA’s SEA exclusively on SoundCloud, citing the fan-powered payout model as the reason behind their decision to release exclusively on SoundCloud.
The release marked the first time the track was made commercially available on a major streaming platform (apart from YouTube, where the video currently has over 3.5m views).
SoundCloud said later in the year that the song was earning 500% more under the fan-powered payout model than it would have under the pro-rate model.
“The model’s working. artists with authentic and loyal fan bases are being rewarded – and it’s just the first step. ”
In a statement announcing the new stats, SoundCloud, said: “The model’s working. Artists with authentic and loyal fan bases are being rewarded – and it’s just the first step.
Fan-Powered Royalties is powering a fan economy where there’s opportunity for more engagement between artists and their fans; driving the creation of an innovative, integrated ecosystem to promote the artist-fan relationship across multiple touchpoints on SoundCloud. ”
Music Business Worldwide