SoundCloud’s Michael Weissman talks about the next phase of fan-powered royalties | Digital

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SoundCloud CEO Michael Weissman hinted at following the company’s fan-powered royalty (FPR) model.

The digital platform triumphed in the Music Consumer Innovation category at this year’s Music Week Awards in recognition of the user-centric initiative, which launched in 2021.

Under FPR, each fan’s subscription or advertising revenue is split among the artists they listen to, rather than being aggregated in the traditional pro-rata model that the music industry has used for more than a decade.

SoundCloud says the “transformative” approach has created a “more equitable and transparent” system for its 135,000 independent monetized artists, reporting that on average, independent artists earn 60% more through RPF compared to the traditional model in pro rata and five times more month by month since launch.

“Clearly as an artist, building that dedicated fan base — whether it’s 30 people, 100 people, or 100,000 people — is the key to everything,” Weissman said, speaking in the new number of music week.

“In many other places, you might see 10 million people listening to your music a month, but it’s really about the 10,000 real fans who are there to listen to you specifically. And building those relationships is inherently essential to becoming a musician. We’re just setting up the economy for that to happen, nothing has to change, it just provides more clarity on how to find and grow your fan base.

FPR was previously limited within the ecosystem of independent and emerging artists. But SoundCloud recently extended that with its worldwide licensing agreement with Warner Music Group. The new deal sees each artist on Warner Music’s roster get paid based on fans’ listening behavior on SoundCloud.

Independent artists make more money with FPR and that’s because they have dedicated fans; it’s less about passive listeners

Michael Weissman, SoundCloud

Last year, SoundCloud reported that Portishead’s 2021 cover of ABBA’s SOS garnered six times more royalties than they would pro-rata, with 3% of their most dedicated fans contributing 91% of this total.

“We’re going to share more case studies, but overall indie artists make more money with FPR and that’s because they have dedicated fans; it’s less about passive listeners,” Weissman said.

Weissman described the findings of last year’s DCMS report – which called for a complete music streaming reset – as “the right intention and the right area of ​​focus”.

“There should be more discussions directly between streaming platforms, rights holders and decision makers,” he added. “I think we need to find ways to work together to experiment more with new models, features, and tools that allow artists to make more money. That’s where the conversation needs to go.”

On a related note, Weissman explained what’s next for RPF.

“It’s really about building two things: providing artists with the data and insights to talk and connect with their fans, and finding new revenue opportunities so fans and artists can transact directly,” said he declared. “It can be extended. What we have done so far is the first phase. There are multiple ways and examples in other media that provide much more revenue opportunities for the music industry in its together.

“One of the biggest challenges in music right now is that there’s a ceiling on what a fan can actually contribute to an artist. So if I’m paying $10 or £100 a month [for a streaming subscription], it’s basically the ceiling of what I can reinvest in the music ecosystem. What’s happening is that fan revenue is capped, it goes into a pooled ecosystem, and it’s basically split between artists based on their play market share.

“What we’re ultimately trying to do is say, ‘I’m a fan and I want to support this artist directly… I’m willing to pay £1, £2, £5, £100 a month for this the artist and I should be able to do that. Ultimately, we’re putting the pieces in place to get to that point where there’s variability in the amount of fan money that comes into the system.

It’s time to experiment

Michael Weissman, SoundCloud

Additionally, Weissman suggested that the music was ripe for a new consumption model.

“If you think about the evolution of music, CDs have been around for about 20 years, the download market for 10 to 15 years, and the streaming model is about a decade since Spotify got the first license,” he said. he declared. “It’s always those 15 to 20 year increments, and that means we’re at the point where a new pattern needs to emerge.

“To do that, you have to experiment with how revenue is generated and how artists and fans can then enter data and find information together. And then, ultimately, it’s how the fans and artists interact and drive commerce.

“Now is the time to experiment. You shouldn’t experiment when things are bad, you should experiment when things are even better. Now is a better time to take those risks.”

The full interview with Weissman appears in the new issue of music week.

PHOTO: Andre Lipovsky

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