Published
Thu, Jul 21, 2022, 15:30
- WMG artists will now receive payouts based on the actual amount of user listens.
Warner Music Group is the first major label to sign up to SoundCloud's "fan-powered" royalty (FPR) model.
The Berlin-headquartered streaming company first announced the new system, which allocates royalties based on individual user listens, in March 2021. A recent report conducted via Midia Research analysed the earnings of 118,000 artists using the FPR system on SoundCloud. 56 percent said they earned more with FPR than with the pro-rata model used by Spotify and others.
"Under FPR, each fan's subscription or advertising revenue is distributed among the artists they listen to, rather than being pooled under the traditional pro-rata model the music industry has been using for over a decade," SoundCloud said in a press statement.
WMG, along with the other major labels, has long been opposed to the idea. But this move could signal a shift in the industry at large. Rolling Stone previously reported that the pro-rata model led to the top one percent of artists receiving 90 percent of streaming revenue.
Midia Research's report also found that smaller artists received higher payouts from "super fans"—or listeners whose streams contribute more than $0.10 per month. In addition, SoundCloud saw a 9.2 percent increase in artists who earned over $1,000 from streaming between April 2021 and February 2022.
"The evolution of the music industry brings new ways to create, consume and monetise," said WMG's chief digital officer, Oana Ruxandra. "As the ecosystem expands, WMG is focused on advancing and experimenting with new economic models to ensure the opportunities for our artists and their communities are maximised. SoundCloud has been an amazing partner in connecting artists and fans, deepening our relationship will allow us both to proactively build for the future."