Adao /

Billboard bagged an exciting-sounding exclusive on Friday: “SoundCloud to let fans pay artists directly“. However, the details on what, how and when are very much still to be decided, it turns out. “A source close to the company says SoundCloud is still exploring several alternative streaming payout models and will announce its plans before the end of the first quarter of 2021,” it reported.

There’s some interesting reading between the lines to be done though: the article goes on to stress how SoundCloud currently distributes payments on a ‘pro rata’ basis, meaning that the subscription fees from listeners “aren’t distributed to artists based on who they personally listen to, and they can’t ‘tip’ or steer their subscription fees toward their favourite acts”.

In other words, the strong implication is that SoundCloud’s plans – or at least its potential plans – involve some version of ‘user-centric’ payouts, which would make it the first big DSP to go down that route. Tipping is slightly different: YouTube remains the biggest music streaming service by users, and it has a thriving creator-tipping economy – Super Chats, Super Stickers and channel memberships – which musicians can use.

Adding tipping to SoundCloud would be a great move, if not revolutionary, but could the service really go user-centric? Based on Deezer’s struggle to get even a limited trial up and running, SoundCloud couldn’t do it with major labels’ music and major publishers’ songs. But its community of entirely independent artists – including those who use its own Repost network for distribution – does open a pathway for some kind of experiment.

It will be complicated. If someone pays SoundCloud a monthly subscription and listens to a mixture of DIY and label-signed artists, operating a user-centric system alongside the existing pro-rata model seems fraught with challenges. We should also be wary of talking up the scale of such an experiment too much: SoundCloud generated €99.5m of revenues from its ‘listener business’ in 2019 – a sum that Spotify earns every five days.

Even so, while going entirely user-centric with the backing of all the labels, publishers and collecting societies is still a super-tough prospect, SoundCloud’s community of independent creators gives it a shot at doing something interesting around the model.

The resulting data on user-centric in action on a live service would be valuable. But even if SoundCloud goes down the creator-tipping route instead, it could be a welcome development for artists on the platform. Meanwhile, that Billboard piece does feel a bit like the company – sorry, “multiple sources close to the situation” – deliberately testing the waters for these possibilities. The industry reaction will be telling.

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Stuart Dredge

Music Ally's Head of Insight

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