(Hypebot) – Soundcloud has become the first major streaming service to shift to a user-centric artist payment system it is calling “fan-powered” royalties.
Beginning on April 1, each Soundcloud listener’s subscription or advertising revenue is distributed among the artists they listen to, rather than being pooled as it is by Spotify and other music streamers.
“This new model benefits independent artists and empowered fans to play a larger role in the success of their favorite artists,” according to Souncdcloud. “It also encourages the growth of local scenes and the rise of new genres.”
A new kind of pay to play?
But Soundcloud’s new user-centric royalties come with a big major caveat
For artists to collect user-centric royalties you have to be a paid Pro Unlimited or Repost by SoundCloud subscriber which costs $144 a year and $30 per year respectively. According to Soundcloud’s FAQ:
“If you choose to revert back to a Free account, your Premier monetization benefits will be terminated.”
Third-party distribution via CDBaby, TuneCore, DistroKid, and other services is not an option to receive fan-powered royalties.
How fan-powered royalties work
Soundcloud will pay royalties based on what portion of a fan’s time they listen to each artist. The total amount of money generated by a fan for the artists they listen to is based on these factors:
- “How much the fan listens to that artist relative to all of their listening time in a given month”
- “How many advertisements the fan has consumed”
- “Whether the fan has a paying subscription to SoundCloud Go+”
“Fan-powered royalties benefit independent artists whose fanbases are dedicated to listening to their music frequently. So if a fan only listens to an early-stage rapper from Detroit or an emerging singer from France, most or all of their subscription or advertising revenue will go to those exact artists.”