Industry Opinion: Should Soundcloud Pay Artists For Every Stream?

It's the only streaming platform that plays in every country, but big artists are fed up with getting nothing back. Fortunately, it looks like that's all about to change - but it might leave regular musicians like you behind.

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Soundcloud has been criticised for not paying artists for every stream it plays, unlike other modern streaming services like Spotify and Deezer.

That might not seem like a big deal when the other platforms pay a fraction of a cent per stream, but when you're a major label artist with a hundred thousand plays, those pennies add up.

If Soundcloud doesn't pay, why do so many artists use it and even choose to pay for it to promote new music anyway? And why is that all about to change?

The answer to the first question is simple: it works anywhere. In fact, we at Ultimate Guitar have to use Soundcloud, because we have a global audience and know that Soundcloud will work in every country, unlike YouTube. Our US readers might not notice any problems with YouTube embeds in our top 10 lists, but over in countries like Germany they just don't work because of the way music licensing works over there. Soundcloud works because there's no money changing hands and therefore no authorities blocking the way to ask for a cut.

Some people think Soundcloud gets plenty right, but fails in some critical respects. One particularly vocal music marketer on this topic is Darren Hemmings. He runs digital marketing campaigns for several high-profile artists and is credited with Alt-J's successful online campaign which helped them win a Mercury music prize for their debut album, but his views are also interesting because he's friends with Soundcloud's London staff and even shared an office with them until last year. (Let's just say his views on this matter are insightful.)

These are Hemmings' observations as laid out in a blog post this week:

- Soundcloud needs to introduce ads. "Theyre growing rapidly, and need to satisfy rightsholders who at some point will make a put-up-or-shut-up demand on them," says Hemmings;

- Soundcloud is is running a risk of being overshadowed by a range of new streaming services. We all know how Spotify works, but 2013 is the year that the streaming scene changes. Google are stepping into the fray, Apple are still rumored to be making deals for a streaming platform, and Trent Reznor's Daisy service with Dr. Dre is making waves before anyone really understands what it's going to do when it eventually launches. Soundcloud's strength is that you don't actually need an account to hear songs on it, which is great for reasons explained above, but it's only a small leap for one of the current or forthcoming platforms to do the same and leave Soundcloud behind;

- Soundcloud needs to demonstrate what the value of a fan on their platform is. There's massive growth in listens and activity on Soundcloud as the Next Big Sound 2012 report demonstrated (below), but while everyday Joe artists are just pleased to see listeners enjoy their tracks, marketers want to convert that audience into more money. One way to do that is earn royalties per stream. Another is to somehow hook those listeners with a means to contact them later. Right now, Soundcloud does neither;

Soundcloud's average monthly plays per artist

- SoundCloud needs to understand what kind of service it is. This is the albatross around its neck. Soundcloud was pretty much the first audio platform on the web 2.0 scene that really took off, and it deserves a lot of credit for that, but times have changed.

"I think Soundcloud has an identity crisis of sorts," says Hemmings. "Soundcloud always presented itself as a social network, but I think the reality is that the social element only really kicked in with the recent relaunch. So exactly what space do they occupy? Right now it feels vague."

As you can tell, Soundcloud has plenty to contend with and improve. But it looks like that's all about to change.

At SXSW this week, Soundcoud introduced a new payment structure, cutting down from four different pro plans to two: Pro for 29 per year ($38) which offers an extra four hours worth of music storage, and Pro Unlimited for 79 ($129) with unlimited uploads (perfect for labels) and a tonne of fancy new features. These features could be set to solve the above concerns, and one of them (if you believe the rumors) will be in-line advertisements, like on YouTube.

If you're not willing to pay, don't worry; there will still be free accounts. Not everyone produces music to upload, so they don't need to buy the extra storage, but by signing in they can still take part and "repost" tracks they love. This contributes to a community feel which brings 180 million people back to the site every month, according to Music Ally.

One lingering issue: if Soundcloud starts playing to the beat of a different drum, the benefits of global access and promotion could be at risk. That won't be an issue for many, but for others it could be just another digital divide between nations which pushes us further apart, which hardly lives to the ideals of the old internet. But then, the old internet meant waiting 40 minutes to download a 2MB MP3 files - and I don't think anyone can say they miss that.

33 comments sorted by best / new / date

    stickman31
    I don't get it. If you use it for free (or pay for the premium) why are you entitled to get paid? Nobody is forcing you to upload on the service, so why get mad if you upload and aren't making profit?
    jebbe9696
    Because as a service gets bigger, artist and other rightsholders become forced to upload their music there, since the market will demand it. Being able to refuse will be a priveliege only open to the biggest of the big (like michael jackson, metallica, pick floyd, in spotifys case)
    PnT
    Marketers, shareholders, etc. etc. I think most of these can only see the quick buck and fail to see that reaching more people is equally, if not more, important as that.
    jebbe9696
    In the direction we are going however, you will soon only be able to do the former.
    dewitt
    What, make a quick buck but not be able to reach anyone? How do you figure that?
    jebbe9696
    The other way around was what i ment :/ That's what i get for doing other things while writing.
    Crazykae
    I like that there is a site where I can upload my music and people can listen to it without it costing either party money. Furthermore, I would hate to think that if Soundcloud began paying contributing artists that it would become unavailable in certain countries. If I wanted people to pay money for what I'm putting out, I would put out an album.
    U_Mad_Bro
    I think that if the artists don't like not getting the money for it, they should stop using it. I've always seen Soundcloud as a way of sharing your own sounds that you're happy to share for free, not to make some money
    vIsIbleNoIsE
    yea, i assumed it was a way for bands to hook new listeners, or be nice to their fans by uploading unreleased tracks, or something.
    Ibanez8
    In my opinion, Bandcamp is the best site out there right now for artists and fans alike. No other site gives the band complete control of their music. Bandcamp lets you set your on prices, easily upload multiple albums and even choose if the whole album is available for purchase or just stream. Not to mention the money actually goes to the artist instead of them only getting a fraction of it. You can even sell merch from it. I don't know why a band would use any other site.
    UGtom
    Bandcamp is great for independent artists, but the percentage fee it takes is not attractive to many people selling more than a few thousand dollars.
    ne14t
    Nope, it's a free service, you want to make money off it then SoundCloud will implement a monthly fee and then the service becomes useless to hobbyists like myself that have come to the conclusion making music will not be profitable enough for me to live the life I want, so now I just share my music for free so at least people can hear it and judge it. I am sure there are already streaming services in which you can get paid for you contributions, but no sense in ruining a good thing just to please some people.
    dewitt
    If there's tons of popularity built up, largely due to investments in the company, yet no money ever starts coming in, eventually the money will move to somewhere more profitable, anyway. Soundcloud will essentially be pushed out of contention if they don't start making money in one way or another, as sad as that is.
    Scorpyin
    lol what are you basing your facts on? you realize you don't HAVE to pay top dollar to host a website, even one as big as soundcloud, right? SoundCloud could stay free and would survive off of ads alone if they were to implement them. But like the first guy said, its a FREE service which goes a LONG way today, a lot of people use soundcloud BECUASE its a free service alone, putting a price tag on it would actually give it less of a chance of surviving. Why would you pay for their service when there's a million sites that already do that, AND much better?
    hereticfive
    Its free to a point, the paid version allows extra features to the uploader. I really dont think soundcloud should pay anyone since its more for independent artists and up and coming artists. Its nothing like pandora.
    CommanderMeaty
    I use it so I can share my musical ideas with other musicians friends. and money should not be involved with my music.
    headbang123
    No seeing as how on soundcloud you upload your own recordings. That'd be like youtube paying you for all the videos you upload.
    jebbe9696
    Youtube does pay you for the videos you upload, if you get a certain amount of views/subscribers.
    jrcsgtpeppers
    lol wtf the **** average plays per artist my ass. my songs get like 30 plays every 3 months, bullshit on the 6k average plays.
    daniellopezsalonen
    this might be replying to an old comment, but the average doesn't mean everyone gets 6k, it means that if you average the plays big artists have (millions) with the ones smaller artists have (500,200,100,50 or 30 plays) you would get that number.
    martintigermaan
    // FREE DOWNLOADS ARTISTS: How you want to make money from your artist work, when you constantly releasing your creations for free. How you want to sell your licenes (ads, spots, movies ect.) when your songs are for FREE? Forget DEAR ARTIST about the all associations (RIAA, BMI, GEMA,SACEM, Stowarzyszenie Autorów ZAiKS ect. ) protecting your copyrights ever when you are the part of FREE DOWNLOAD "community". I know that the portals like SoundCloud give us an opportunity to be known more than ever, but understand ONE THING that making music is not just about donations and giving everything for free. Are you a novice artist? I understand, but if you spend more time in studio than a normal manual worker, do not be a donor who does not value your time and work.
    tudd
    This is really appreciate this wonderful post that you have provided for us. I assure this would be beneficial for most of the people. This article gives the light in which we can observe the reality. thanks for shared! buy soundcloud comments
    tijerina.eric
    I feel just like with YouTube, they should give you the option to become a premium partner. Where your channel/account becomes a paid station. Therefore the limitations that exist with music being played in other countries etc... becomes a choice and not a defacto-across-the-board standard. I manage a lesser well-known artist and we are now earning about 8k plays a week. We invest a lot of money into studio time and our art, including music videos etc. With Soundcloud becoming more popular I would love to see this as source of streaming revenue.
    The Celturian
    Soundcloud is a good platform to upload your sound and get it played around, streaming has always been floating around cyberspace from the earlier days of MySpace and sights like that, with no money for the artists in order to get royalties you have to be a member of PRS or a musical licensing company to receive a payment. I found that SC was a place to let your music rip and get positive feedback so that will tell you if your music is well worth the market for a few dollars in sales to the companies you set to release your music on..
    thelosingstreak
    jaybrinks obviously a christian nutjob. me? i'll take any money, because "i need it" plain and simple lol. anyways, the reality is, royalty organisations "will" eventually partner with soundcloud (gemma, mcps, bmi, sacem, jasrac), i've already spoken to prsformusic (mcps) about it. You can expect streaming rates similar to last.fm, aka, 0.0000XXXXX per stream, and I guess it will come in sometime in 2014. Streaming royalties will mostl likely come from the royalty orgs direct, and not Soundcloud. Soundcloud will just have to pay so-much-per-year-fixed-fee for hosting material which is registered with the org. I dont know about you, but I look forward to my royalty cheques
    jaybrink101
    I shouldn't be paid for posting stuff on Soundcloud. I use it to get people to listen as a hobby. Leave it free.
    Toasted_Waffelz
    I use soundcloud quite a bit, very few big artists use it however there are some excellent lesser known ones. Also people like Bulb use it for demos, sound tests and silly stuff that they would like people to hear but don't plan to sell. It doesn't really feel like something that people would be paid to upload to.
    jrcsgtpeppers
    no they shouldnt. i have filled up 3 soundclouds with music and i dont think i should be payed for any of it. they should however come up with a donation system.
    OtherGuy
    I think this is a good idea. With increasingly less people directly purchasing music, a small income for some artists wouldn't go a miss. I also think that if this were to be put in place, more people would feel inclined to upgrade to premium deals anyway. Also, yes, if AdBlock will block ads, why not? Win-win.