SoundCloud announced on Tuesday that it will be the first streaming service to directly link subscriber payments to independent artists they support, a move that has been welcomed by musicians fighting for fairer remuneration.
Currently, streaming services such as Spotify, Deezer and Apple put copyright fees in a big pot and pay them according to which artists play the most role globally.
Many artists and trade unions believe that this system is grossly unfair and accounts for a large portion of superstars like Drake and Ariana Grande, while little-known musicians have almost nothing.
From April 1st, SoundCloud will start using the new system, in which the royalties collected from each individual subscriber will only flow to the artists they stream.
However, this only applies to the approximately 100,000 independent artists who profit directly from the site. Musicians licensed from major record companies will continue to pay through traditional consolidation methods.
SoundCloud said the new payment system-known as the “supporter fee” or “user-centric model”-could enhance the capabilities of listeners and encourage more diversity in music styles.
The statement said: “Now, artists can better develop their careers by establishing deeper connections with their most loyal fans.” “Fans can directly influence the remuneration of their favorite artists.”
Major record companies are thought to be able to resist “user-centric” payments, partly because the current system allows them to generate large profits with relatively few superstars.
A study conducted by the French National Music Center earlier this year found that 10% of all revenue from Spotify and Deezer goes to the top 10 artists.
This has allowed major record companies to accumulate record revenues in the past year, just as most musicians are in crisis due to the pandemic canceling live tours.
The French streaming platform Deezer has been promoting the development of a user-centric system for several months, but it has been hampered by label boycotts. He said that SoundCloud’s plan is “a great first step.”
Chief Content and Strategy Officer Alexander Holland told AFP: “Deezer is ready to launch a comprehensive (user-centric) payment system pilot at any time, and we look forward to SoundCloud persuading labelers to do so on our side. “
Earlier this year, record company bosses told the British Parliamentary Committee that a study investigating the streaming economy showed that switching to fan-based royalties may be too complicated for platforms.
SoundCloud has been trialling the new model for several months, and it said it was completely wrong-it was user-centric and its calculations took only 20 minutes, while the combined model took only 23 hours.
“The most important takeaway from SoundCloud data is that none of the previous modeling is accurate. When you actually run a user-centric system, the rewards for artists with audiences will be greatly increased,” Crispin Hunt Said the British Academy of Ivory. The college has been developing a campaign aimed at “fixing streaming media.”
He said: “This proves the value distortion brought about by the existing model.”
The French National Music Center’s research only used data from Spotify and Deezer, and found that changing to fan-based copyright fees would have only a small impact on the income of young artists.
It said that the top ten will cost about 4.5 million euros (approximately 400 million rupees), but they will be allocated very little among the lower classes.
However, SoundCloud found that it has made a big difference. Take, for example, an artist with 124,000 followers. It says that they will increase the monthly royalties from US$120 (approximately Rs 10,600) to US$600 (approximately Rs 52,800).
It said that the overall effect is that 90% of royalty payments will now be driven by 90% of listeners instead of 40% under the current model.
SoundCloud said that its positive data may be related to the particularity of users, who tend to be “younger and much more active.”
It was launched in Berlin in 2007 as a music YouTube that allows anyone to upload music, from loose garage band covers to dubstep DJ installations.
This makes it very popular, with approximately 175 million users in 2019. However, it has been struggling to earn revenue and has run into legal troubles due to the number of unauthorized mixes and covers on the site.
In 2016, it changed its strategy and signed contracts with major brands to provide a catalog of high-quality services similar to those of its competitors. However, compared with the number of customers of Spotify, Amazon and Deezer, there is still a long way to go.
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