SoundCloud has announced a new payout plan for artists.
The platform is introducing a “fan-powered” royalties plan, in which an artist’s payout is based on a fan’s overall listening time. Currently, money from fans is pooled and distributed to artists depending on their share of total streams. At the moment, this benefits stars more than independent artists. As of 1 April, the new fan-powered plan will mean that money from a fan’s subscription will be divided between the artists that individual listens to, and the payout will depend on the fan’s listening habits.
The plan has been introduced in a bid to level the playing field for artists, who, with this new system, will be paid via real streams from fans as opposed to bots and fake plays. Independent artists who monetise directly from SoundCloud are eligible for the plan.
A paper by the University of East Anglia published today (2 March) argues that, under SoundCloud’s current system, independent music is being squashed out of streaming playlists and revenue, while major labels have an unfair advantage with playlist access, resulting in them receiving a larger share of revenue. Co-author Daniel Antal, founder of big data startup Reprex, said, “We recommend that the payment system should be reformed by moving from the pro-rata payment system to a user-centric remuneration, where the royalties generated by an individual user’s subscription is simply split between what they choose to listen to.”
The paper states that a “substantial benefit of UCPS (user-centric payment system) is that it would eliminate the current cheating of the system through the ‘farming’ of streams.”
“Currently, individual accounts can be used to play particular labels’ music non-stop, thus increasing their total share of revenues. Although the streaming services have systems in place to try and police such activity, it is inherently difficult, and can lead to ‘takedown’ actions which some consider disproportionate. UCPS would solve this in one stroke”.
Head to SoundCloud’s site for further information.