(Credit: Rachit Tank)

SoundCloud launches new artist-friendly royalty system

SoundCloud has announced details of a new scheme that sees them become the first streaming service to direct the fees of paying subscribers to the artists they listen to. This highly-welcomed move has previously been suggested by musicians who believe it is the fairest way for streaming services to operate.

This new method contrasts with how leading streaming services such as Spotify and Apple Music currently operate. Their system sees artists receive royalty payments concerning the number of plays they have gained on the platform. However, smaller artists have criticised their system who believe that the system is only created to benefit those at the very top, and it’s not designed to work for everybody.

SoundCloud’s new system kicks in on April 1st, and they will start directing royalties due from each subscriber to only artists they have streamed. “Many in the industry have wanted this for years. We are excited to be the ones to bring this to market to better support independent artists,” said Michael Weissman, SoundCloud’s chief executive officer, in a statement.

Weissman added: “Artists are now better equipped to grow their careers by forging deeper connections with their most dedicated fan. Fans can directly influence how their favourite artists are paid.”

This announcement comes after a series of UK parliamentary select committee hearings examined the economics of streaming. During the hearing, SoundCloud slammed claims that fan-based royalty payments would be too tricky for streaming platforms to do and stated that its royalties calculations took just 20 minutes under the new model, rather than 23 hours under the current one.

“The most important takeaway from SoundCloud’s data is that none of the previous modelling has been accurate, that when you actually run a user-centric system, the rewards to artists that have an audience are significantly improved,” said Crispin Hunt, chair of the British Ivors Academy.