The new model, unveiled by the company back in March, directs royalties due from each subscriber only to the artists they are currently streaming – a system backed by independent artists, as well as advocates for a fairer streaming model.
This is in contrast to the pro-rata model utilised by streaming platforms like Spotify and Apple Music, where royalty payments from users’ subscriptions are distributed in accordance with which artists have the most plays.
That system has been criticised by proponents of a more user-centric approach, who say the model allows huge stars to generate vast amounts of money, while leaving little for musicians who have not achieved similar success.
Now, SoundCloud has detailed how its model may benefit artists more equitably, after trip-hop group Portishead released a cover of ABBA‘s ‘SOS’ on the platform back in July, with proceeds going to charity.
According to a statistic provided by SoundCloud to Pitchfork, the track earned over six times the revenue it would have under the pro-rata model used by other platforms in less than a month, representing more than a 500 per cent increase.
In their statement, a representative for SoundCloud acknowledged that “full aggregation of market-live payout data is pending over the coming months”, as data around the newly-launched system continues to be observed.
“The model is tracking as expected and the Portishead stat is a strong confirmation of the model’s design – fan engagement is driving meaningful revenue,” they said.
Speaking to Pitchfork, Portishead’s Geoff Barrow called SoundCloud’s royalty model “a real opportunity for people who want to support artists”.
“I didn’t expect huge amounts of people to listen to [‘SOS’]. It was more about getting the idea out that you could stream music and it could make money… It’s the difference between being able to order a pizza and someone actually paying the rent,” he said.
Upon announcing the user-centric model back in March, SoundCloud CEO Michael Weissman said in a statement that the platform would “better support independent artists”.
“Artists are now better equipped to grow their careers by forging deeper connections with their most dedicated fans,” he said. “Fans can directly influence how their favorite artists are paid.”
The move came after a series of UK parliamentary select committee hearings investigated the financial impact of streaming.
The likes of Radiohead‘s Ed O’Brien, Elbow‘s Guy Garvey and Nadine Shah warned MPs that unfair streaming payments were “threatening the future of music”, before it was claimed that emerging artists are facing “massive competition” from established acts.
During the hearing, SoundCloud also disputed arguments that fan-based royalty models could prove too complex, pushing up administrative and operational costs. The platform claimed that its royalties calculations took just 20 minutes under the new model, compared with 23 hours under the old one.
Back in March, protests were held out Spotify offices worldwide in a fight for greater transparency and a move towards a user-centric model. In response, Spotify launched a website called Loud & Clear, designed to give more transparency around its payment practices.
Portishead’s Geoff Barrow was one of those who argued the site didn’t offer the answers they were calling for. “Yep, it’s pretty ‘Loud and Clear’ where they money goes – and it ain’t the fucking artists,” he wrote.