The First Convert to User-Centric Streaming

At the top of the list of “things to talk about in the music industry” has for a long time been streaming. Ever since my Intro to the Music Industry class as a Freshman, streaming has been THE topic of most projects. Is it good for the industry? Are artists paid their fair share? Are streaming platforms unavoidable necessities or greedy digital monopolies?

After what is being considered one of the most promising years in a long time for music revenue due to streaming, SoundCloud is officially changing the rules of the game with its new payment model: Fan-powered royalties. Rather than pouring all the subscription fees into a huge pot and paying artists for a number of streams, artists are paid more when listeners choose their music more often. If I pay $10 for a month of service and only listen to a single artist, that artist (theoretically) recieves all of my $10. The idea behind fan-powered royalties (or the mainstream name, “user-centric payment system”) is to support less-established, independent artists that have a signficiantly devoted fan-base.

On paper, it makes sense. The superstar has listeners and fans all over the world, meaning a comparatively small portion of them are superfans. The independent artist is not known worldwide, but still has fans, most of which are superfans. Under the market-centric payment system (the status quo), the superstar obviously gets more streams and more money from the subscription pot than the indie. Using the user-centric payment system, the superstar still gets a lot of streams and good money, but now the indie receives more money for the streams of his hardcore fan-club.

Superfans [are] individuals who digitally interact with the artist in multiple ways, from liking social media posts to buying merchandise, listening to music across an artist’s catalog, visiting the artist’s official website and other indicators

Tatiana Cirisano, The Fan Data Goldmine

While the actual monetary result of the user-centric payment system is contested, you can’t ignore the underlying value being expressed by SoundCloud. What we see leading the industry growth is indie artists and the creative tools they use. A simple combination of our DIY obession, accessible technology, a plethora of platforms and a pandemic to provide the free time has led the independent artist to grow faster than the major labels. An evident connection is the increase in payouts of 26% by indie artist tool CD Baby. Spotify recently announced that 60,000+ tracks are added to Spotify everyday. It’s plausible that most of those tracks do not belong to established superstars, but bedroom-studio musicians with a handful of family and friends that listen intently to their music and will closely follow their career.

While there is no way to know for sure if SoundCloud’s fan-powered royalty model will provide more money for indie artists, it exemplifies two acknowledgements in the streaming culture: the immense value of superfans for artists of all levels and the need to get more streaming royalties in the pockets of indie artists.

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