SoundCloud debuts 'fan-powered royalties' for emerging artists

Music companies are infamous for how they exploit aspiring artists and keep them stuck to the grim bottom of the pole while mega stars continue raking in the big bucks. It’s an exhausting business with slim chances to make it larger than life, and those who go into it not only have to compete with human talent but also the occasional bot. SoundCloud is trying to step away from that nasty cultural impression, at least when it comes to paying artists.

The company on Tuesday announced a major shift from its existing payout system to a more democratic one that rewards independent talent. Dubbed "fan-powered royalties," SoundCloud says that emerging artists will now be "paid based on their dedicated fans' actual listening habits." The payout for the artist is directly dependent on their fan's "overall listening time." The changes take effect on April 1.

"The more fans listen on SoundCloud, and listen to your music," the company stated on Tuesday, "the more you get paid." If you're an artist on SoundCloud, your "fans" are the users you can see in your SoundCloud insights dashboard.

Of course, there's always the question around which clicks are authentic and which clicks are manufactured artificially. This is where SoundCloud warns, "You're paid by actual fans who stream your music. Bots and fake plays don't count." Play fair and square (and melodiously).

Let's talk numbers — OK, being paid by your fans sounds amazing. But what does a fan-powered payment system actually look like? According to SoundCloud, a musician with 124,000 followers would have made $120 monthly under the previous model, which presumably points to cuts taken by the company. The previous model generated payouts based on the total number of streams an artist had, and in this kind of system, established artists won heavily over the new and independent artist.

Under the new model, this hypothetical musician will make roughly $600 per month. The new model boosts payouts by 217 percent, which is a jaw-dropping increase and could breathe new life into online music streaming by factoring in the number of times a fan listened to an artist's music in a month, the number of ads they went through, and if they have a paid subscription to SoundCloud Go+.

Those eligible for the new payout model include artists who directly monetize through SoundCloud as well as "Pro Unlimited subscribers in the Premier Program, Repost by SoundCloud subscribers and members of Repost Select." Because payment cycles differ for different programs, Premier artists will get their (hopefully chunky) payout in May and Report artists will get theirs in June.