Artists like Drake and Taylor Swift could soon be earning significantly more from their music through streaming services. According to Bloomberg news agency sources, his record company Universal Music Group (UMG) is in talks with streaming platform SoundCloud for a different distribution of remuneration for its artists.
UMG CEO Lucian Grainge already announced earlier this year that he wanted a new rewards strategy that “values all customers and rewards the music they love”. He hasn’t clarified much about it yet. Insiders now say that the advisors are looking at different implementations of the “artist-centric model”. It is also being discussed with streaming service Deezer, among others.
SoundCloud is already working with record label Warner Music to introduce a ‘fan-powered royalty’ system in 2021. This way, the revenue from each individual customer’s listening behavior is allocated directly to the artist who listened instead of having everything go into one big pile first. For example, artists with loyal fans tend to grow at the expense of musicians who generate lots of streams because they appear on certain playlists. SoundCloud focuses more on niche music from independent artists than competitors Spotify and Apple Music.
UMG, the world’s largest record company, still didn’t want to go with this model. The company, which is listed on the Amsterdam Stock Exchange, has major world stars such as The Weeknd under its wing.
The music industry has seen its revenue increase over the past decade due to the rise of streaming. But in recent years, the field has slowed down because there are still too many illegal hearings. So record labels are looking for new ways to increase revenue.