SoundCloud ‘testing fan-to-artist direct payment system’

The development would make SoundCloud the first major music streaming platform to introduce a direct payment system, on which Tencent Music-owned streaming service QQ Music is built.

SoundCloud has not commented on the news yet, but the company is reportedly looking at a number of other alternative payout models prior to announcing its plans before the end of the first quarter this year.

SoundCloud has more than 175 million monthly active users who have the option to sign up to its on-demand streaming service SoundCloud Go+ for $10 per month. However, their payments are not distributed to artists based on who they personally listen to. Much like other major music streaming platforms, SoundCloud uses a pro-rata model, which pools subscriber revenue and pays out earnings to the artists who hyave garnered the most streams, giving the bulk of the income to the biggest musicians.

SoundCloud’s fan-to-artist direct model would work in a similar way to the user-centric payment system (UCPS), which seeks to pay artists for the listeners they have, as opposed to counting small percentages of a much larger pool. Deezer has been trying to implement the UCPS model for more than a year.

SoundCloud’s move could be a game changer in music streaming. The news also comes on the heels of the fourth UK Parliament’s inquiry session into music streaming, where the fairness of streaming economics is being investigated. SoundCloud, along with Twitch and YouTube, is scheduled to participate in an upcoming sessions of the inquiry.

SoundCloud has the freedom to experiment with new payment schemes without approval from major record companies. The company has also been focused on providing artist services since April last year, when it launched its own marketing and distribution platform for independent artists called Repost. This after it acquired rights management and distribution company Repost Network in 2019.

Last week, SoundCloud announced it had ventured into the gaming arena with SoundCloud Player One – a live-streamed gaming tournament inside Fortnite featuring eight SoundCloud artists. The upcoming tournament will be the first in a series of gaming events from the platform, which says about half of its users are gamers.