SoundCloud's fan-powered royalties leave more questions than answers
SoundCloud recently announced a new feature that on its face seems like a good move, but is it really?
WordPlay T. Jay took a dive into the company’s new fan-powered royalties plan and seemingly surfaced with more questions than answers.
The company announced the change and touted it on Twitter on March 2 as a more fair and transparent way for artists to earn money on SoundCloud. Calling it a “game-changing” model, SoundCloud said it is a way to level the playing field and empower fans to directly contribute to artists they love, benefitting rising independent artists and implementing an artist-first platform.
The new system goes into effect on April 1 for artists monetizing on the website.
The first thing T. Jay noticed was the system sounds a lot like Patreon, meaning the model isn’t as groundbreaking as SoundCloud would have its users believe.
Beyond that, there are many “factors” T. Jay said play into this system and how artists will earn money, such as how much a fan listens to an artist, how many ads a fan consumes, and whether or not a fan has a SoundCloud Go subscription.
Diving in deeper, T. Jay said artists have to meet certain requirements, as well when it comes to monetizing on the site.
“You have to be part of certain tiers, like the premier tier, where you spend $12 a month to monetize and have to have 500 streams per month to even qualify,” T. Jay said. “Then, there is a tier called SoundCloud Repost where you don’t have to have the streams, but you still pay $2 a month for them to share your music with other retail companies.”
T. Jay said while the fan-powered royalties sound attractive, the real question is, how is SoundCloud spending its money?
As of 2020, the site had 25 million creators. If everyone monetizes, that could produce revenues of $25-$300 million per month for the company. Getting more realistic, about 12 million creators have an active audience, which drops revenues to $25-$144 million per month if they all monetized.
In either scenario, SoundCloud could make up to $2 billion per year from its creators, then they will share ad revenue, making it similar to Adsense on YouTube, but artists have to pay.
The real question in T. Jay’s mind is, what percentage will SoundCloud actually pay out and how much will they be making. Those are questions he could not find the answers to.
“Are they putting their money where their mouth is and investing in creators?” T. Jay asked.
For more on the SoundCloud change, check out the video below!