Artist News Business News Digital

SoundCloud says user-centric boosted the royalties for Portishead’s SOS by 500%

By | Published on Thursday 16 September 2021


SoundCloud says that an Abba cover posted to its platform by Portishead received six times more royalties because the company employs a user-centric system for distributing monies to its community of independent creators. So, that’s six times more than if the industry-standard practice for allocating streaming monies to tracks had been used.

Streaming is a revenue share business with services sharing their revenues with the music industry each month. That process begins by allocating a percentage of revenue to each track in the system, based on what portion of listening each track accounted for. That allocation is then shared with the label or distributor that controls the recording rights, and the publisher or collecting society that controls the accompanying song rights.

Under the current system employed by most services – sometimes called the ‘pro-rata’ system – revenues and usage data are pooled for each subscription type in each market. So if a track accounts for 0.1% of all listening by UK premium subscribers, it would be allocated 0.1% of all premium subscription revenues.

With user-centric the same system applies, but the maths is done at a user level. So if one track accounts for 0.1% of one subscriber’s listening, it is allocated 0.1% of that user’s subscription money. Some people argue that this is a fairer way of allocating monies to tracks, and/or it would benefit middle-level artists over superstars.

Earlier this year SoundCloud started using a user-centric system – what it calls ‘fan-powered royalties’ – for music which has been directly uploaded to its platform by independent creators. With tracks provided to SoundCloud by labels and distributors, monies are still allocated to tracks using the same system as everyone else.

Portishead originally recorded a cover of Abba’s ‘SOS’ for the soundtrack to 2015 film ‘High-Rise’. Although it has been on YouTube since 2016, it isn’t available on streaming services like Spotify. The band said that they decided to post it to SoundCloud in July this year – in order to raise money for the charity Mind – because they supported the platform’s fan-powered royalties scheme.

According to Pitchfork: “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. 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% increase”.

A rep for SoundCloud told Pitchfork that, given it has only been using the user-centric approach for a few months, it is still crunching the data regarding the wider impact, but that “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”.

While the user-centric approach does seem fairer, some in the industry have raised concerns regarding the costs and complexities of switching to that model, while research has been generally inconclusive regarding the extent to which user-centric would actually result in middle-level artists getting bigger track allocations each month.

But Portishead’s Geoff Barrow is a supporter. He told Pitchfork: “[The user-centric model] is a real opportunity for people who want to support artists. I didn’t expect huge amounts of people to listen to [‘SOS’]. It was more about getting the idea out that you could stream music and it could make money… It’s the difference between being able to order a pizza and someone actually paying the rent”.