SoundCloud has come up with a payout model that will help independent artists earn directly from their fans.
Bengaluru: SoundCloud, online audio distribution and music sharing website based in Berlin, has found a way to bring artists closer to their fans. They have introduced a new payout model that lets fans directly pay their favorite artists. Earlier, artists on SoundCloud used to get paid via PayPal, and countries like India that didn’t use PayPal were eliminated out of the pay-out model.
But there’s a catch. Not every artist is eligible to benefit from this model. Artists need to be independent creators with a pro or pro unlimited account that has at least 500 eligible plays over the course of the previous month, a criterion set by SoundCloud.
The artist also needs to clearly own the rights to their music, and not be under any record label. They also ought to upload their music directly through one of SoundCloud’s monetization programs: premier, repost, or repost select.
Hisab, a musician on SoundCloud, said that SoundCloud used to be the premier place for music until Spotify showed up. “Fans on this platform are extremely loyal. Every artist dreams to have a following on SoundCloud,” said Hisab.
He further mentioned that this new model will help artists make a living through the royalties they earn from their fans. This makes the listeners the deciding factor behind what an artist earns. “But even though independent artists shall start getting paid now, bigger artists with a larger following will naturally earn a lot more,” he added.
BLUK, with over 700 followers on SoundCloud, is one of the bigger artists Hisab was talking about. He recently got familiar with the new monetization model and is already benefiting from it.
“This system’s going to help a lot since royalties are always the main source of earning money as a music producer. And ever since they implemented this feature, I have already gotten a few dollars from my existing releases,” said BLUK. He later mentioned that artists who are just starting out will find it difficult to use this model to their advantage since they don’t have an existing following to get royalties from.
Existing artists have various ways to earn revenue. One can have access to a sync license. They can also hire a distributor who, after getting a cut out of the artist’s paycheck, will promote their music to music stores like Spotify, Apple Music, or Jio Saavn. YouTube ID content, another source of income, enables an artist to get paid every time their music is played.
But Hisab believes that this new move by SoundCloud has the potential to change the entire dynamic of how business is done in the music industry. What separates this model from the rest is that artists will earn royalties based on the number of listeners, not streams.
Aayush Varghese, who works at RECK, a record label, believes that artists, especially in India, need to be able to make money however they can. “I think this SoundCloud initiative is great for the Indian subcontinent and SoundCloud could end up becoming a big thing because of this,” said Aayush.
Earlier, many Indian artists like the Peter Cat Recording Co. had shifted to Bandcamp, an internet music company, so that they could make money. Streaming platforms like Spotify or Apple Music barely pay anything to Indian artists, which is why many bands sell merchandise now.
Mr. Varghese was himself part of a band, Kyojin, which disbanded because they couldn’t make profits out of their streams. “Back in the day, bands could sell CDs to make money. Now they need to sell merchandise because one t-shirt sale pays more than 1000 streams on Spotify,” said Aayush.
Aayush doesn’t think record labels will mold their business plan around SoundCloud’s new model. “If this SoundCloud initiative takes off, record labels will eventually make models of their similar to it. Then the artists tied to them would just start posting on the label’s SoundCloud profile,” added Aayush.
This model essentially cuts the middle-man, like a record label, out. The success of this model would mean recording labels would get the short end of the stick.
Sanchi Kalani, an artist manager working for a record label based in Delhi, however, is all for it. “If SoundCloud makes this work, and artists earn directly from their fans, that would allow independent artists to earn based on their merit, which is fantastic news,” said Sanchi.
Sovit Rastogi, an avid SoundCloud listener, supports this move. “This makes the process of getting paid in the industry more equitable. For once, big companies won’t take away most of the money,” said Sovit.