by Mandt Dalugdug, Music Business Worldwide, May 4, 2023
In recent news, SoundCloud has struck a global licensing deal with Merlin, the global independent label agency. This deal will enable Merlin to opt-in to SoundCloud's "fan-powered royalties" model, which distributes revenue based on actual listening habits rather than pro-rata (per-stream) payments.
Unlike the traditional pro-rata “one big pot” streaming model – adopted by services such as Spotify – FPR is a user-centric model that allocates a share of each listener’s subscription and advertising revenues only to the artists/tracks they individually listen to.
The fan-powered royalties model has been gaining popularity as an alternative to the traditional pro-rata model. This model is seen as fairer for independent artists and labels, as it rewards dedicated listeners rather than simply those with the most streams. This is because the revenue generated from a listener's subscription is paid directly to the artists that they listen to, rather than being divided between all artists on the platform based on their overall number of streams.
This new deal with Merlin means that SoundCloud can offer the fan-powered royalties model to over 20,000 independent labels and distributors represented by Merlin. This is a significant step forward for independent artists and labels, as it gives them a more equitable way of generating revenue from their music.
SoundCloud has always been committed to supporting independent artists and labels, and this new deal with Merlin is a reflection of that commitment. By offering a fairer way of distributing revenue, SoundCloud is helping to level the playing field for independent artists and labels, giving them a better chance of success in the highly competitive music industry.
By April 2022, SoundCloud reported that 135,000 artists were getting paid through its Fan-Powered Royalties platform. In July last year, Warner Music Group signed a global licensing deal with SoundCloud, becoming the first major label to adopt SoundCloud’s payout model.
In conclusion, SoundCloud's new licensing deal with Merlin is a significant step forward for independent artists and labels. By offering the fan-powered royalties model, SoundCloud is providing a more equitable way of generating revenue for independent artists and labels, helping them to compete with major labels and giving them a better chance of success.
Read the whole article on Music Business Worldwide, where it was initially published.
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Top image of Kablito, taken from Merlin's website.
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