SoundCloud rumored to be rolling out direct fan-to-artist payment system
Since newly-appointed CEO Michael Wiessman took the reins at SoundCloud last December, the German streaming platform has already started to pursue new business ventures outside of music. The fresh new face of the company announced SoundCloud Player One, a live-streamed gaming tournament inside Fortnite featuring eight SoundCloud artists, which is set to take place on February 18. Within the application itself, SoundCloud is rumored to be pursuing a new alternative payout plan that could potentially revolutionize the way music streaming pays out its artists. The model would allow fans to directly pay artists in the application, multiple sources told Billboard, although SoundCloud declined to comment.
The rollout flies in the face of the traditional “pro-rata” model used by Spotify, Apple Music, and yes even SoundCloud, whereby digital streaming platforms (DSPs) divvy out their subscription fees to record labels (based in part on the labels’ market share). Labels then pay their artists based on their individual contracts, with the label superstars often getting a majority piece of the pie. In the current “pro-rata” model, the bulk of the revenue gets sent to the world’s biggest acts. The model essentially keeps money centralized at the top, which has caused critics to opt for a model that better supports talent outside of the “major label acts.”
By contrast, the new model would allow fans to direct their subscription money to the artists they actually listen to. Plus, users may be able to “tip” their favorite artists by funneling their subscription fees directly at the artist(s) of their choosing. With SoundCloud’s 175 million monthly users, who on average pay $10/month under the SoundCloud Go+ tier, these are figures that definitely add up. A direct fan-to-artist payment model, like the ones used Patreon and OnlyFans, would thus level the playing field for artists and give the consumer more choice.
The move would make SoundCloud the first major music streaming platform to prioritize a direct payment strategy, although it has proven a popular model with Chinese streaming services like QQ Music. If popular, the fan-to-artist model could create revolutionary change in the music and tech industries if creators and consumers began demanding the bigger DSPs to follow suit.
It’s not a done deal in this direction though. A source close to SoundCloud says the company is still exploring several alternative payout models and will announce its plans before the end of the first quarter of 2021.
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