SoundCloud Says User-Centricity Increased Royalties for Portishead’s SOS by 500%
Artist news Commercial news Digital
By Chris Cooke | Posted on Thursday, September 16, 2021
SoundCloud claims that a cover of Abba posted on its platform by Portishead received six times as many royalties because the company uses a user-centric system to distribute money to its community of independent creators. So that’s six times more than if the industry standard practice of allocating streaming funds to tracks had been used.
Streaming is a revenue sharing business with services sharing their revenue with the music industry each month. This process begins by assigning a percentage of revenue to each track in the system, based on the audience share each track represents. This allocation is then shared with the label or distributor which controls the recording rights, and the publisher or collecting society which controls the rights of the associated songs.
In the current system used by most services – sometimes referred to as a “pro rata” system – revenue and usage data is aggregated for each type of subscription in each market. So if a track accounts for 0.1% of all UK premium subscribers’ plays, it will be allocated 0.1% of all premium subscription revenue.
With the user-centered system, the same system applies, but the calculations are done at the user level. So if a track represents 0.1% of a subscriber’s listening, it is allocated 0.1% of that user’s subscription money. Some people argue that this is a fairer way to allocate money to songs, and / or it would benefit mid-level artists rather than superstars.
Earlier this year, SoundCloud began using a user-centric system – what it calls “fan-generated royalties” – for music that was uploaded directly to its platform by independent creators. With the tracks provided to SoundCloud by labels and distributors, the money is still allocated to the tracks using the same system as everyone else.
Portishead originally recorded a cover of Abba’s “SOS” for the soundtrack to the 2015 movie “High-Rise”. Although it has been on YouTube since 2016, it is not available on streaming services like Spotify. . The group said they decided to post it on SoundCloud in July this year – to raise money for the Mind charity – as they support the platform’s fan-fueled royalty program.
According to Pitchfork: “SoundCloud has now explained how at least one song performed in the fan-powered model compared to the traditional prorated pool system. In less than a month, ‘SOS’ earned more than six times the revenue it would have with a prorated model, according to a SoundCloud statistic provided to Pitchfork. In other words, this represents an increase of over 500% ”.
A representative from SoundCloud told Pitchfork that since it has only been using the user-centric approach for a few months, it is still analyzing the data regarding the broader impact, but that “the model follows as forecast and the Portishead statistic is a strong confirmation of the design of the model – fan engagement generates significant revenue ”.
While the user-centric approach seems fairer, some in the industry have expressed concerns about the costs and complexity of moving to this model, while research has generally been inconclusive as to the measure. in which the user-centric approach would actually train mid-level artists. get bigger track allowances every month.
But Geoff Barrow of Portishead is a supporter. He told Pitchfork: “[The user-centric model] is a real opportunity for people who want to support artists. I didn’t expect huge amounts of people to listen [‘SOS’]. It was more about spreading the idea that you could play music and that it could bring in money… It’s the difference between being able to order pizza and having someone pay the rent ”.