#Under SoundCloud’s New Royalty Plan, Your Money Goes to Artists You Listen To

SoundCloud has announced a new “fan-powered” royalty distribution system that purports to help smaller artists compete with megastars. Under the new system, a listener’s subscription or advertising revenue goes directly to the artists they listen to “rather than their plays being pooled,” as a press release puts it. At the time of launch, these royalty rules apply only to independent artists, meaning those not signed to the three major labels. The new system rolls out on April 1.

At streaming services like Spotify, artists receive a portion of subscriber and ad income tied to their share of plays across the entire service. In other words, if you paid $9.99 for the month and streamed  Sleater-Kinney 100 times, to the exclusion of anything else, Sleater-Kinney would receive roughly 30 cents of your money. If, that same month, Drake received 5 percent of total streams by all users, he would take a 5 percent share of the portion of the $9.99 allocated to royalty payments. Conversely, once the new plan is rolled out in full, SoundCloud would pay Sleater-Kinney the entire amount—once the company has taken its cut—and none to Drake.

SoundCloud’s CEO Michael Weissman said in a statement: “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. SoundCloud is uniquely positioned to offer this transformative new model due to the powerful connection between artists and fans that takes place on our platform. As the only direct-to-consumer music streaming platform and next generation artist services company, the launch of fan-powered royalties represents a significant move in SoundCloud’s strategic direction to elevate, grow and create new opportunities directly with independent artists.”

Read “Is There a Fairer Way for Streaming Services to Pay Artists?” on the Pitch.