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SoundCloud announces overhaul of royalties model to 'fan-powered' system


Collapsing the Wavefunction
Yeah it's the right thing to do. The streaming system as it currently stands is ridiculously biased towards big artists and big labels. I don't think most musicians, even those on streaming sites, realize how it actually works.

Here's an example: let's say you have 100 fans who pay $10 a month and listen only to your music. Let's say each one of those people listens to 100 of your tracks in a month, so you had 10,000 total plays. Since 100 people paid $10 each and listened only to your music, you should get some percentage of 100*$10 = $1000 right? Let's say you and the streaming service split up those revenues 50/50. That means your revenue from those 10,000 plays would be $500.

But no - in the streaming world all revenues are pooled then divided up on the basis of plays. So let's say a play is worth $0.001. Your 100 fans x 100 plays - 10,000 plays, so you wind up with $10.

But weren't you entitled to $500? Where did the other $490 go? The answer: to other artists who had more plays. Your fans who listened only to you are forced to subsidize other artists with more plays.

That's a terrible business model and totally contrary to how it worked back in the days of physical album sales. Of course, the major labels love it because they control the major artists with the most plays and they're taking a chunk of your revenues even though your fans aren't listening to their artists.

I've never understood how that approach is anything but anti-free-market.

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