A plan has been proposed by Soundcloud that would implement a departure of the service from the “pro-rata” system currently used by the site and most major streaming services. The new changes would enable users to pay the artists directly.
Under the current approach of the industry, Fader explains that “a streaming service’s revenue is paid out to artists based on what percentage their music makes up of the platform’s total streams.” This system allows for the mega-stars in the industry to receive a much larger income from streaming than the extremely long tail of other artists.
Bandcamp is also endeavoring to ease the financial burden of artists through the extension of its Fee-Free Fridays, during which the site waives its revenue on artists’ sales. This allows the artists to receive a greater portion of money, especially as many artists who rely on touring as a main source of income continue to struggle because of the decrease of safe live performance opportunities.
Spotify’s method of paying out revenues was commented on by CEO Daniel Ek, who mentioned concerning artists who do not receive enough income from streaming for a living wage: “The artists today that are making it realize that it’s about creating a continuous engagement with their fans. It is about putting the work in, about the storytelling around the album, and about keeping a continuous dialogue with your fans. I feel, really, that the ones that aren’t doing well in streaming are predominantly people who want to release music the way it used to be released.”
Artists such as Neko Case and Massive Attack responded negatively to the view of Ek, and the group Sumac removed their latest album from Spotify because of Ek’s comments.
Soundcloud had its first profitable quarter ever last year, and the streaming service also added account verification as a feature for popular artists that use the site.
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