A collaboration between Portishead and SoundCloud has shed light on a new loyalty distribution system that proponents claim could help the playing field for working musicians. Under SoundCloud’s “fan-driven” loyalty model, Presented in March, a listener’s subscription or advertising revenue goes directly to the artists they listen to at any given time; that is, instead of the “pro-rata” model typically used by Spotify and other streaming services, where money is collected and distributed to rights holders based on their market share.
Advocates of the new loyalty approach, also known as “user-centric”, have long argued that it would increase revenue for a class of professional musicians across the biggest stars, and a 2017 academic study from Finland supports this view. The SoundCloud fan-driven loyalty plan is available exclusively to the nearly 100,000 independent artists directly monetized by SoundCloud — artists signed to major labels and independent labels are already subject to existing licensing agreements — so data on the model’s impact has been scarce so far.
SoundCloud has now outlined how at least one song performed under the fan-driven model compared to the traditional pro-rata pool system. On July 8th, UK Trip-Hop pioneers and psych-rock veterans Portishead made their cover of ABBA “SOS, “Previously streaming only as a music video, available over SoundCloud. Streams of the track earn revenue through SoundCloud’s fan-driven royalties with proceeds benefiting. In less than a month, “SOS” has earned more than six times the revenue it would have under a pro-rata model, according to a statistical soundCloud provided to Pitchfork. In other words, it represents more than a 500 percent increase.
A SoundCloud spokesman said in a statement that “full aggregation of market life payout data will await in the coming months” as the company launches its system. “The model is pursuing as expected and Portishead Stat is a strong confirmation of the model’s design – fan engagement leads to meaningful revenue.”
“[The fan-powered royalty model] is a real opportunity for people who want to support artists, ”Portishead’s Geoff Barrow told me over the phone. “I did not expect a huge number of people to listen [‘SOS’]. It was more about getting the idea out that you can stream music and make money …. It’s the difference between being able to order a pizza and one actually paying the rent.
Barrow heard about fan-driven royalties through the #BrokenRecord campaign, a UK movement dedicated to parliamentary inquiry whether platforms like Spotify and Apple Music pretty much distribute their revenue.
Tom Gray, founder of #BrokenRecord, claims that, along with boosting revenue for professional musicians, the user-centric model also eliminates streaming fraud because fraudulent streams no longer count towards a revenue pool. Gray also claims that the fan-driven system will eventually give artists more accurate data about their fan’s listening habits, which could help them with selling goods and planning trips. Regional, specialty, and local-dialect music would also generate more revenue among user-centric, according to Gray. “Which is what I would describe as good for culture,” he told me via Zoom. “You can start to see labels investing in things that don’t pop up again because they want to build a broader, deeper catalog.”
The user-centric model has critics. Former chief economist of Spotify Will Page, the UK indie label group The Association of Independent Music, and others have argued that “user-centric distributions would increase administrative and operational costs due to increasing complexity”, according to a recent British government statement. between. But the report adds that “these would probably be within the current processing limit of modern computer systems (which are still improving).”
Read “Is there a fairer way to pay for streaming services for artists?“On the pitch.