Earlier this year, SoundCloud teamed up with Portishead to test a new royalty distribution system that it said had the potential to be much more profitable for artists than the protocols used by Spotify, Apple Music, and the other platforms.
In conventional streaming, money from subscribers is pooled into a big pot. At the end of the month, the streamer determines which the market share of rightsholders (i.e. the percentage of total streams by individual tracks) and pays out an equal percentage from the pot. So, for example, if Drake gets 10% of all the streams in a month, he gets 10% of the pot.
If you’re a subscriber and listen to Drake, that’s fine. You’re paying for playing Drake. That’s fine. But if you’re a subscriber and don’t listen to Drake, your money is still going to him and not to the artists you prefer. This is annoying for both you and your favourite artists. It also means that the successful streamers get richer while niche artists get almost nothing–even though you, as a fan, want your subscription money to go to them.
SoundCloud’s “user-centric” model of payments is different. Those artists signed up for the plan see money come straight from people who listen to their stuff. Portishead, who offered to act as a guinea pig for the new system, saw them earn 500% more royalties for a test song they posted (an ABBA cover) than they would have had they posted it on any of the other streaming platforms.
Great, right? Absolutely. However, this new fan-powered royalty plan is only available to 100,000 or so indie artists. Major artists can’t sign up because they’re already roped into existing digital deals and can’t participate in this user-centric model. Still, now that we’re seeing some solid empirical data on how this method of royalty payments can work, maybe some sort of grassroots campaign will build trying to force all streamers to adopt the same thing.
Love the idea. But then again, my name ain’t Drake.
More at Pitchfork.