Last year, SoundCloud launched their new royalty structure based on the actual listening habits of its subscribers. Now, Warner Music Group becomes first major label to adopt this royalty model.
Beginning in April 2021, and billed as an industry first, the “fan-powered royalties” system drives revenue directly from fans to artists who monetise through SoundCloud, with each fan’s subscription fees or ad revenue shared between their favourite artists.
A recent report titled ‘Building a fan economy with Fan-Powered Royalties‘ powered by Midia Research analysed the earnings of 118,000 artists using the FPR system on SoundCloud. 56 percent said they earned more with FPR than with the pro-rata model used by Spotify and others. Also Rolling Stone previously reported that the pro-rata model led to the top one percent of artists receiving 90 percent of streaming revenue.
“Under FPR, each fan’s subscription or advertising revenue is distributed among the artists they listen to, rather than being pooled under the traditional pro-rata model the music industry has been using for over a decade.”
Soundcloud
This Midia Research report also found that smaller artists received higher payouts from “super fans”—or listeners whose streams contribute more than $0.10 per month. In addition, SoundCloud saw a 9.2 percent increase in artists who earned over $1,000 from streaming between April 2021 and February 2022.
Read full report here: Building a fan economy with Fan-Powered Royalties
Holding to the actual scenario, WMG’s chief digital officer, Oana Ruxandra said: “The evolution of the music industry brings new ways to create, consume and monetise” … “as the ecosystem expands, WMG is focused on advancing and experimenting with new economic models to ensure the opportunities for our artists and their communities are maximised. SoundCloud has been an amazing partner in connecting artists and fans, deepening our relationship will allow us both to proactively build for the future.”
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