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What Are Soundcloud’s ‘User-Centric’ Royalties

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(Hypebot) — SoundCloud made a bold statement this week aimed at proving its commitments to artists.

SoundCloud is now the first major streaming service to shift to a user-centric artist payment system it is calling “fan-powered” royalties.

But what are user-centric and how do they differ from the current system?

Starting on April 1st revenue from a SoundCloud listener’s subscription and from advertising will be distributed among the artists which a user actually listened to that month, rather than being pooled as it is by Spotify and other music streamers.

USER-CENTRIC PAYMENTS: A fan’s paid subscription and any ad revenue generated is distributed only among those artists that the fan actually listened to.


THE CURRENT SYSTEM: All streams on a service like Spotify are added up, and artists get paid in proportion to how much their streams represent out of this pooled total.

Many believe that current system means that smaller artists and niche genres receive less than their fair share of the money.

Great solution. Or is it?

A French study did not confirm that user-centric led to more equitable payments.

“Moving to UCPS would erode revenues for the Top 10 most-streamed artists and “could promote a redistribution of income for the benefit of artists, titles and genres with the weakest audiences, but, if the percentages of change seem not insignificant, the amounts in value remain in reality limited, as they stand,” according to the study.

Then there’s the pay to get paid caveat to Soundcloud’s new offering which requires that artists pay $30 a year or more before they can receive any royalties.

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