Soundcloud announces “Fan-Powered Friday”, additional payments to creators

At a time when everyone is arguing over streaming royalties, Soundcloud offers a cutting-edge solution that fans and artists love.

By James Shotwell of Haulix.

The problem with music is not the access that streaming allows, but the agreements made by those who control streaming to minimize what they pay to artists. For example, you give Spotify $10 a month to stream as much music as possible. Spotify, in turn, takes that $10 and takes a cut for itself before dividing the remaining money between each artist you stream, right?

Bad.

Soundcloud royalties

Calculator streaming royalties is no small feat. Each platform has a specific formula and no two systems are the same. Spotify may pay $0.004 per stream one day but $0.006 another, and there’s no way to tell which day has which rate until they’re already running.

But Soundcloud takes a different approach. Starting in 2021, Soundcloud began using a fan-powered method to calculate music streaming royalties. Whenever someone pays Soundcloud for streaming, that money is split among the artists that person listens to during their subscription period. In other words, if you give Soundcloud $10 a month and only listen to two artists, each artist gets half of your total subscription.

To celebrate one year of their fan-powered platform, SoundCloud is launching ‘Fan Powered Fridaya one-day event on Friday, April 29 this invites fans to stream music from their favorite indie artists all day, and SoundCloud will double the artist’s payout — corresponding to 100% of the income generated that day.

Think about it a bit. Soundcloud will match every penny won by artists on its platform this Friday, April 29. Such an endeavor would be crazy for any label, let alone a streaming service with thousands of artists. Nothing like this has been attempted on such a scale before, with the exception of Bandcamp Fridays, and even that’s not a distant comparison.

In addition to announcing Fan-Powered Friday, Soundcloud shared several insights into the first year data of its new royalty system:

  • On average, independent artists earn 60% more from fan-powered royaltiesv. the traditional pro rata model
  • Communities are feeling the love from fans: live performers like Tribal House and Neo-Soul, and the Soulection collective, earned 2X more
  • Fans make an impact by supporting the artists they love: there is a 97% increase in fans contributing more than $5 to a single artist
  • Fan-fueled royalties contributed to the growth in the number of independent artists monetizing on SoundCloud by 30% (March 2021-present)

What remains to be seen is whether or not another streaming service will follow Soundcloud’s lead and offer fan-powered royalties. Tweet us and let us know your thoughts.

James Shotwell is Director of Customer Engagement at Haulix and host of the company’s podcast, Inside Music. He is also a known speaker for promoting careers in the entertainment industry, as well as an entertainment journalist with over a decade of experience. His signatures include Rolling Stone, Alternative Press, Substream Magazine, Nu Sound and Under The Gun Review, among other popular outlets.

Victor L. Jones