A collaboration between Portishead and SoundCloud has shed light on a new royalty distribution system that proponents argue could help level the playing field for working musicians. Under SoundCloud’s “fan-powered” royalty model, unveiled in March, a listener’s subscription or advertising revenue goes directly to the artists to whom they listen in a given period of time; that’s instead of the “pro-rata” model typically used by Spotify and other streaming services where money is pooled and divvied up to rights holders based on their market share.
Advocates of the new royalty approach, also known as “user-centric,” have long argued that it would raise incomes for a class of professional musicians beyond the biggest stars, and a 2017 academic study from Finland supported this view. SoundCloud’s fan-powered royalty plan is exclusively available for the nearly 100,000 independent artists who monetize directly through SoundCloud—artists signed to major labels and independent labels are already subject to existing licensing deals—so data about the model’s impact has so far been scarce.
SoundCloud has now outlined how at least one song has fared under the fan-powered model in comparison with the traditional pro-rata pool system. On July 8, UK trip-hop pioneers and psych-rock veterans Portishead made their cover of ABBA’s “SOS,” previously streaming only as a music video, available via SoundCloud. Streams from the track earn revenue through SoundCloud’s fan-powered royalties with proceeds benefiting charity. In less than a month, “SOS” earned more than six times the revenue it would have under a pro-rata model, according to a statistic SoundCloud provided to Pitchfork. In other words, it represents more than a 500 percent increase.
A SoundCloud representative said in a statement that “full aggregation of market-live payout data is pending over the coming months,” as the company is in the midst of launching its system. “The model is tracking as expected and the Portishead stat is a strong confirmation of the model’s design—fan engagement is driving meaningful revenue.”