SoundCloud May Soon Launch a Direct Artist Funding System

Written by Bill Toulas
Last updated September 24, 2021

According to a report by Billboard, which hasn’t been officially confirmed yet, SoundCloud is planning to introduce a new artist financial support system allowing users/fans to pay them directly. This direct support is similar to Bandcamp’s business model, where artists in full control of how they sell their creations and merchandise to fans. If this happens, SoundCloud will become the first major music streaming service to embrace that model, sending waves of turbulence across the industry.

Right now, SoundCloud and all other major music streaming platforms such as Spotify, YouTube Music, Apple Music, Deezer, Tidal, and Amazon Music, are merely acting as intermediaries between the users and the artists. The platforms collect the subscription money paid by the users and then distribute it to the creators based on the traffic they generate on the platform. The problem with this model is that it leaves little breathing space for smaller artists.

For example, niche music creators who don’t enjoy mainstream popularity make very little through the present business model. If these bands and musicians are allowed to set their own price tags to reflect the uniqueness of their creations, they could start making more money from their smaller fanbase. It’s essentially a move that gives everyone the freedom to follow their own artistic expression approach and not have to sacrifice their true character to seek at least some mainstream success.

There’s a buzz growing in the industry, as the voices that call for a change had multiplied during the pandemic - when many smaller artists decided to finally go online. But seeing this shift being embraced by more major platforms is a complicated matter. These “alternative” payment models essentially render music labels obsolete or at least push them aside, and these entities aren’t going to just accept this fate.

Recently, we saw a case of them insisting on going after the last bits of crumbs they’re still losing through piracy, so these firms aren’t just letting things take their natural development form. User-centric and artist-focused payment models are only fair, but there will be barricades along the way without a doubt.

Right now, record labels are being paid from user subscriptions based on their market share, how their artists are doing on the music streaming platforms, and what individual agreements they have made with the websites to give them the rights to the content. That said, platforms that are too focused on major artists are very unlikely to adopt direct payment systems any time soon. Maybe this is exactly what is going to give SoundCloud an even sharper edge on the market.

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