Warner Music Adopts SoundCloud’s Artist-Friendly Royalty System

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Soundcloud logo
Credit: Logo courtesy of SoundCloud

When the streaming- and social-networking service SoundCloud decided to instate their royalty payment system in March 2021, longtime users of the site and the new wave of the music industry leaned in to listen.

Prior to this pay upgrade for music artists, SoundCloud paid contributors through pooling revenues from the platform’s collected streams, or overall and accumulated plays by listeners (This pro-rata system, the same one employed by Spotify, has been criticized for its payouts, which tend to favor a small percentage of superstar artists.)

SoundCloud’s current fan-powered royalties (FPR) intend to be a more equitable and specific way to compensate artists for their original work. According to a recent press release, Warner Music Group (WMG) has signed a licensing deal with SoundCloud, making the media giant the first major label to utilize the FPR payout model. Essentially, WMG artists will now also enjoy having their music monetized directly by plays by their audience, in lieu of concerns of selling physical copies of their releases, or even touring to promote their music. 

SInce introducing its FPR model last spring, SoundCloud has seen a 30% increase in subscribers to its premium creator services, according to an article in The Verge.

According to recent data, since starting in 2007, SoundCloud has attracted an estimated 76 million users and 175 million listeners.  Featuring more than 300 million tracks from international artists, the site was the de facto launch pad for future Grammy winners including Billie Eilish, Young Thug and Tyler the Creator, with the majority of the Berlin-based SoundCloud’s audience based in the United States. 

So, what does this mean to music artists toiling away in their bedroom studios? There’s no time like the present for musicians to read the fine print. One needs to sign up for SoundCloud’s Pro membership, which ranges from $8-$16 a month, yet tracks uploaded to the site are monetized within minutes.

But hold back on buying that yacht: SoundCloud’s flat rate remains in the range of  $0.0025 to $0.004 per stream; so, for every 1000 plays, the artist receives $2.50-$4.00. Yet according to Forbes, Billie Eilish, the poster child for SoundCloud and streaming services in general, is worth a modest $53 million dollars. Fire up the GarageBand. 

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