SoundCloud's New Fan-Powered Royalty Model Could Shake Up Music Streaming Forever

After years of platform reformation and corporate restructuring, audio distribution platform SoundCloud has announced a new fan-powered royalty model, which the company touts as a "game-changing" innovation to empower independent artists.

The new model is predicated on fan bases, whose streaming activity will drive and dictate payout rates to the artists they listen to. With the ambitious move, SoundCloud will distribute a portion of its users' subscription payments and accrued advertising revenue to the musicians they listen to on the platform, with the objective of supporting independent artists with loyal fans.

The model could serve as a harbinger for the future of music streaming. "SoundCloud is uniquely positioned to offer this transformative new model due to the powerful connection between artists and fans that takes place on our platform," said Michael Weissman, SoundCloud's CEO, in a press release. "As the only direct-to-consumer music streaming platform and next generation artist services company, the launch of fan-powered royalties represents a significant move in SoundCloud’s strategic direction to elevate, grow and create new opportunities directly with independent artists."

The news arrives at a pivotal time for independent artists, the majority of which are treading water after experiencing the financial pitfalls precipitated by the COVID-19 pandemic. Despite a constant and unwavering deluge of new music on streaming platforms by those artists, however, the vast majority feel underpaid and undervalued. 

It seems that independent artists' influence in the streaming landscape is as ubiquitous as ever due to the accessibility of distribution on major DSPs, like Spotify. In fact, a recent report by Music Business Worldwide notes that major record companies' stranglehold on Spotify is dwindling by the day. Across the total volume of 2020 global music streams on the platform, music controlled by Universal Music Group, Sony Music Group, Warner Music Group, and Merlin represented 78%. That number may seem high, but it actually demonstrates a steep decline compared to previous years.

You can read more about SoundCloud's new fan-powered royalty model here.