Where can you take your first step as a music artist? SoundCloud is one of your best options – if not the best option. It is a platform where you can upload your tracks and people come to this website to discover music to listen to. You can even get your band a boosted head start, as many budding artists buy SoundCloud plays on their newest, hottest tracks! Modern problems require modern solutions!

The success of Billie Eilish, Lil Nas X, Post Malone, and Future are some of the artists that made their names with SoundCloud. If you have a good sound and know how to market well, you may join the cast in the future.

So, what makes SoundCloud the most popular choice? First of all, anyone can use it since signing up is free. You can upload 3 hours of music, which is enough when you're just starting. Suppose each song is 3 minutes long; that would be a total of 610 songs you can upload to the platform. 

But if you want to become popular by making music, you need to buy the paid plans. It will give you access to useful features and unlimited upload hours. Those will be extremely valuable in advancing your career.

Another thing worth noting is that it will enable you to monetize your content. And right now, SoundCloud has the best monetization program for music artists. Last year, it launched a revolutionary change that made artists applaud.

It launched the “fan-powered royalty” system, enabling the company to support independent artists better.

The head of Sleep Fruits claims to have spent "over eight figures" ($10M-$99M) THIS YEAR to advertise his label's releases on Spotify.

In other words, he's claiming to have spent $10M+ on ads to drive streams on these playlists, now netting him $20-30K/day in revenue.

— Dave Edwards 🎧 (@itsDaveEdwards) September 24, 2021

The Old System

SoundCloud used to have the same monetization system as the industry norm. We can look at how Spotify pays its artists to have context.

The company looks at how many streams happened on the platform in a given country. Then, it calculates the portion of streams that went to a specific artist. The higher the portion of streams that went to that artist, the more they will get from the money pool.

As a result, even if smaller artists have loyal fan bases, they earn less money. That's because they represent only a small portion of the streams.

It is an unfair system, which is why artists have called for a change for many years. 

Fan-Powered Royalties

Last year, SoundCloud announced its revolutionary fan-powered royalties. This model pays artists a share of their listeners' subscription fees.

That said, SoundCloud has stopped pooling its subscribers' subscription fees. Instead, it divides the fees and the advertising revenue among artists they actually listen to. Thus, independent artists who aren't as popular as the ones with millions of subscribers can still make lots of money on SoundCloud. That is a huge boost to artists who are just starting to pop off.

SoundCloud gave an example to show how significant this change is. It cited one artist with 124,000 followers. Under the old model, the said artist makes $120 per month. On the other hand, under fan-powered royalties, the same artist earns $600 per month. 

That's a 400% increase in the artists' earnings. Definitely, this system is a lot better. It would not affect the big artists that much. They'll earn less than before, but not that much because they also have a loyal fan base.

Eligibility

How can you become eligible for fan-powered royalties? First, you need to be eligible for SoundCloud monetization. 

Artists must have at least 500 eligible streams in the past month. Eligible streams mean plays from countries monetizable on SoundCloud, and actual humans instead of bots are listening. Also, you have to be a SoundCloud Pro or Pro Unlimited subscriber. Furthermore, your music should be original, and you should have ownership over 100% of the rights. Lastly, you have to be at least 18 years old or the age of majority in your country.

Then, here's what you need to be eligible for fan-powered royalties. You must be either of the following:

• An artist with a Pro Unlimited subscription in the Premier Program, 
• A Repost by SoundCloud subscriber,
• Or a member of Repost Select.

Fraud

SoundCloud says that it is easy to game the system in the old model. People can use bots to play their tracks repeatedly. Versus the artists who have genuine but fewer plays, they earn more. Since the money is pooled and then distributed, small artists earn even less.

The fan-powered royalties model is more equitable. It ties royalties directly to the contributions made by real listeners. How it works is it considers listeners' subscription revenue and ads consumed. Then, SoundCloud distributes that to only the artists that the listener has listened to in that month.

Because there are no pooled royalties, bots don't make much of an impact. They can't make certain artists earn more and consequently make small artists earn less. As a result, SoundCloud pays more money on legitimate fan activity.

How Much Does SoundCloud Take?

Suppose one listener exclusively listens to your songs. It will not make all their subscription revenue or money generated from ads consumed to go to you. You have to remember that SoundCloud is a business. So, it takes a cut.

A report by Vice said SoundCloud would keep 45% of fan-powered royalties. But a spokesperson from SoundCloud clarified it to Music Ally. They said SoundCloud is paying for mechanical and performance publishing royalties and other costs, like payment providers. So, not all of that 45% goes to the company.

SoundCloud does keep some of the profit, says the spokesperson. Nothing surprising there, as SoundCloud is a business. They add that the amount SoundCloud keeps is in line or even lower than the industry average.

The spokesperson also told Music Ally that they are glad this discussion has been opened and they got to clarify it. One of the reasons why they launched fan-powered royalties is for transparency. And by providing clarifications regarding this matter, they are doing just that.

Takeaway

SoundCloud's fan-powered royalties payout model is revolutionary because it gives indie artists what they deserve. It allows them to earn more money, which they can use to take their careers to the next level or provide for their basic needs.

Date: March 14, 2023 / Categories: SoundCloud Plays, / Author: Joy P