Warner Music Group has become the first major label to adopt SoundCloud’s ‘fan-powered’ royalty model that sees royalties distributed according to how much individual users listen to an artist’s music.
SoundCloud, which launched the new royalties scheme in 2021, described it at the time as "a more equitable and transparent way for independent artists who monetise directly with SoundCloud to get paid." The previous model, described as pro-rata, saw artists get paid based on their share of total streams on the platform, while SoundCloud also previously took out its own share of 30 per cent for "overhead costs."
Now that WMG has adopted SoundCloud’s current royalties scheme, all of those credited to receive royalties from a respective recording will earn their share based on each individual play of said recording. According to a recent report by Midia Research, based on 118,000 artists who used the the ‘fan-powered’ royalties system on SoundCloud, 56 percent of people said they earned more than with the pro-rata model, which is currently used by a number of streaming platforms such as Spotify.
