Warner Music Group becomes first major label to adopt fan-powered royalties system

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Warner Music Group has become the first major label to adopt a fan-powered royalties system through which funds are distributed to acts based on how many individual users listen to their music.

The company is following in the footsteps of SoundCloud, who last year announced that it’d be the first music platform to direct the fees of its paying subscribers to the artists they stream.

SoundCloud said that it was “a more equitable and transparent way for independent artists who monetise directly with SoundCloud to get paid”.

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It’s an approach that’s been previously backed by many musicians who have criticised the economics of online streaming.

Leading streaming services such as Spotify and Apple Music currently operate on a system where royalty payments are distributed in accordance with which artists have the most plays.

But it has been criticised by smaller and up-and-coming acts, who claim that the system allows huge global names to generate vast amounts of money while leaving little for musicians who have not achieved similar success.

Now, it’s been confirmed that Warner Music Group has implemented SoundCloud’s royalty system. Each artist credited with having earned royalties from a particular recording will earn a share based solely on each stream of that specific release.

SoundCloud logo Credit: Press

However, Far Out Magazine cites the results of a recent report by Media Research which found that 56 per cent of artists surveyed were making more revenue by using SoundCloud’s old pro-rata model rather than the new one.

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Numerous other major streaming platforms – including Spotify and Apple Music – are currently still using the pro-rota model.

Upon SoundCloud introducing the fan-powered system, the company’s chief executive officer Michael Weissman said: “Many in the industry have wanted this for years. We are excited to be the ones to bring this to market to better support independent artists.

“Artists are now better equipped to grow their careers by forging deeper connections with their most dedicated fan. Fans can directly influence how their favorite artists are paid.”

Last October, the UK’s competition watchdog launched a market study into the fairness of streaming.

It came after the UK government called on a number of key music industry figures to help consider streaming reforms in response to the DCMS Committee’s report on the economics of streaming.

MPs stressed the need for a “complete reset” of the music industry to address the “pitiful returns” that artists receive. It came as part of a report from the Economics Of Music Streaming inquiry.

The likes RadioheadElbow and Nadine Shah gave evidence to the DCMS. Back in April 2021, over 150 artists – including Paul McCartneyKate BushDamon AlbarnChris MartinNoel Gallagher and Wolf Alice – signed an open letter to Prime Minister Boris Johnson asking to help reform the streaming economy.

In April 2021, AIM published research into an alternative streaming system that was modelled on the UK market.