The economics of the streaming system that governs the majority of royalty payouts in the music space has lopsided outcomes. This is why SoundCloud’s decision to direct the funds from its paying subscribers to the artists they listen to was such a colossal move. Not only did they become the first music platform to do so but they also set in motion what now appears to be a movement.
Warner Music Group has followed in SoundCloud’s footsteps and become the first major label to adopt a fan-powered royalties system wherein artists are paid based on how many individual users listen to their music.
“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 CEO Michael Weismann said about the company’s new approach. “Artists are now better equipped to grow their careers by forging deeper connections with their most dedicated fan. Fans can directly influence how their favorite artists are paid.” (NME)
Leading streaming platforms such as Spotify and Apple Music function on a pro-rota model in which artists with the most streams make the most money. This doesn’t serve up-and-coming artists nearly as well as it does the select few who enjoy global success.
Warner’s switch is one that has been backed by musicians for years, and this will hopefully set an example for others to follow — Musicians credited with having earned royalties from a particular recording will earn a share based solely on each stream of that specific release.