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SoundCloud Fan Powered Royalties Explained

*- guest post by Jeremy Bongiorno of StereoFrequencies.com

The introduction of music streaming services created a shaky landscape for independent artists. That landscape has been around for years now. If you’re anything like me, then trying to find ways to monetize your music has felt like an uphill battle against industry titans. In most cases, that’s not just a metaphor, it’s reality.

With that, one major company is looking to shake things up for musicians everywhere. On March 2nd, SoundCloud announced their new “fan-powered” royalty system. It’s set to roll out on April 1st. 

Since the announcement, the tabloids have been rife with updates on the program. The question remains: how exactly will this affect you and your music?

SoundCloud is looking to change the game by strengthening the relationship between artists and their fans. So, what does this new system mean? How does it work? How can it help you monetize your creations?

To better understand this new system, we need to learn how the current model works.

Out With The Old

For what seems like forever, top streaming services like Spotify and Apple Music have utilized a payout system that’s highly disproportionate to mega stars. 

All the money from advertisers, record labels, and fans gets pooled together in one big pot. From there, the revenue is distributed out to the artists with the most plays, and the most followers.

Now, this is somewhat how things have always worked in the music industry. Back in the day, The Rolling Stones were definitely raking in more cash than your local rock band. With the right amount of effort, that local rock band was still able to make a decent amount of money back then.

Nowadays, the digital age has introduced a plethora of competition. I mean, you can post one video on TikTok and you can become an overnight sensation. Even then, the biggest slice of the pie goes to artists with millions of plays per month.

None of this is meant to take away from those big time artists. They’ve put in the work and made a name for themselves. The industry itself simply has a model that isn’t as favorable to independent artists who want to carve out their own path.

In With The New

When you take a look at the new system, it almost seems to be too simple and easy to be true. That’s because it is. There are a few caveats to it, and we’ll get into that shortly. First, head on over to SoundCloud and check out their breakdown of the program in their own words.

Source: SoundCloud

Here’s the link: fanpoweredroyalties.com

Also, don’t forget to look over the FAQ page for answers to the most common questions about the program.

As you can see, there is a prerequisite for eligibility of the fan-powered royalty system. On top of that, there are a few factors that determine how much an artist actually gets paid. Let’s break those down a little bit more.

Artist Eligibility

Independent artists need to meet one determining rule to be eligible for fan-powered royalties. Drum roll please…

You need to subscribe to one of their higher tier programs. Here are the three programs you can sign up for to meet the requirements:

SoundCloud Premier ($12/month) 

Premier is basically SoundCloud’s monetization program for Pro Unlimited subscribers. If this is the route you decide to go, you’ll be notified when you’re eligible for royalties.

Repost by SoundCloud ($30/year) 

Repost is a music distribution service that SoundCloud has offered for a little while now. There are no eligibility requirements to monetize with Repost by SoundCloud. You are eligible for fan-powered royalties with this subscription. $30 a year equals out to be $2.50/month, so this is a great budget option.

Repost Select 

Repost Select is the next level of Repost. It’s attainable via application or invitation only. Select adds support from SoundCloud’s own account management team.

There’s a whole list of requirements for the Premier program as well. Most notably among them is the fact that you can’t monetize covers. All music must be your original creations. 

Also, there are a handful of countries that aren’t supported. Check out the SoundCloud Premier FAQ page for all the details.

How It All Works

SoundCloud states that they’ll pay royalties based on the span of time fans listen to a particular artist. The total amount of money generated by those fans is based on these three factors:

  1. How much the fan listens to that artist relative to all their listening time in a given month
  2. How many advertisements the fan has consumed
  3. Whether the fan has a paying subscription to SoundCloud Go+

From there, the amount of money you can make is dependent upon the number of fans you have and how much time they spend listening to your original music. 

So that’s the rundown of the fan-powered royalty program. Once you understand the necessary steps, it’s pretty easy to grasp.

The Long-Term Benefits

It’s been a long time since the industry has seen anything like this. Not only that, but it’s the first model of its kind to exist in the digital age of music. The best part is that it’s going to create a more equitable environment in the industry. Artists can have that feeling of financial control over their music again.

It’s not yet clear just how impactful this will be in terms of SoundCloud artists themselves. I can see some major benefits for musicians who already have a decent amount of plays and a loyal fan base. It can also be a great career tool for more established artists on SoundCloud.

The bigger impact I see is more of a ripple effect down the road.

Spotify has a newer program of their own where fans can send tips to their favorite artists. SoundCloud’s fan-powered royalty system digs a little deeper than that. That being said, I can only imagine that Spotify would want to follow suit and roll out their own version of SoundCloud’s system.

After that, things could snowball. Next thing you know, Apple has fan-powered royalties, then Pandora, maybe even Amazon. My point is that we’re only seeing the tip of the iceberg right now of just how big of a deal this is.

I mean, it’s every musician’s dream to make a living off of their music right? Well, this is sure to be a step in the right direction for independent artists to make that dream a reality.

We would love to hear your thoughts and share stories of any successes you see with the Soundcloud Fan Powered Royalty System. Keep in touch.

By IBG Staff

We love music and love to write about it even more. Come join the adventure at IndieBandGuru.com

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