In the ever-evolving music industry, streaming platforms like SoundCloud and Spotify have become essential for artists to share their music and generate income. While both platforms offer artists ways to earn money through their music, the question arises: Does SoundCloud pay artists more than Spotify?
To answer this, we’ll explore how each platform handles artist payouts, their respective business models, and how they support independent musicians.
How Artists Get Paid on SoundCloud and Spotify
Before comparing payouts, it’s important to understand the basic monetization models for both platforms.
Spotify: The Royalty Model
Spotify operates on a stream-based, pro-rata payment system. This means that artists are paid based on the number of streams they generate relative to the total number of streams on the platform. Spotify collects revenue from both its subscription-based and ad-supported tiers, then distributes royalties to artists, labels, and rights holders.
- Average payout per stream: Artists typically earn between $0.003 and $0.005 per stream on Spotify. While this varies depending on factors like country and user subscription type, the payout rate is consistent for most artists.
- Payment distribution: Spotify’s royalty payments are split between record labels, publishers, and the artists themselves. Independent artists who use distributors like DistroKid or TuneCore can receive their share directly, while artists signed to major labels typically receive a smaller cut after label fees.
SoundCloud: Fan-Powered Royalties
In 2021, SoundCloud introduced a new fan-powered royalties model, which represents a significant departure from the traditional streaming royalty system used by platforms like Spotify.
- Fan-powered royalties: In SoundCloud’s model, the more a specific fan listens to an artist’s music, the more that artist gets paid. This is a direct payment model, meaning that the revenue generated by a listener goes directly to the artists they stream, instead of being pooled and distributed across all artists.
- Eligibility: To qualify for fan-powered royalties, artists need to be part of SoundCloud Premier, Repost by SoundCloud, or Repost Select.
This model allows independent artists to potentially earn more if they have a dedicated fanbase, even if their overall number of streams is lower compared to major artists on platforms like Spotify.
Comparing Payouts: SoundCloud vs. Spotify
While it’s difficult to make a direct comparison due to the differences in their payment models, here’s a breakdown of key points when comparing SoundCloud and Spotify artist payouts:
Per-Stream Payouts
- Spotify: As mentioned earlier, Spotify pays between $0.003 and $0.005 per stream. This amount may seem small, but Spotify’s massive user base (over 500 million monthly active users) provides the potential for artists to accumulate substantial revenue through large volumes of streams.
- SoundCloud: SoundCloud doesn’t pay artists per stream in the same way. Instead, the fan-powered royalties model ensures that artists are paid based on the specific fans who listen to their music. For artists with a dedicated fanbase, this could mean higher payouts per fan, especially if those fans listen frequently or subscribe to premium services.
Independent Artist Focus
One area where SoundCloud shines is its commitment to supporting independent artists. With SoundCloud, artists can monetize their music more directly, without needing to meet the high streaming numbers required to earn significant revenue on Spotify.
- Fan loyalty matters: SoundCloud’s fan-powered model means that a smaller number of dedicated fans can generate more income for an artist than a larger number of casual listeners would on Spotify.
- Flexibility for independent artists: Unlike Spotify, where most revenue is funneled through major record labels, SoundCloud gives independent artists more control over their earnings and a larger share of their revenue.
Which Platform Pays More?
The answer to whether SoundCloud pays more than Spotify depends on several factors:
- Fan engagement: On SoundCloud, if an artist has a dedicated fanbase that listens to their tracks regularly, they could potentially earn more through the fan-powered royalties system than they would from the pooled royalties on Spotify.
- Streaming volume: For artists with massive numbers of streams, Spotify’s global reach may provide higher overall revenue, especially when considering its large user base and extensive catalog.
- Independent vs. major artist: Independent artists often find SoundCloud more lucrative, particularly in the early stages of their careers, because the platform allows for greater control and direct monetization.
For most independent artists, especially those who are just starting, SoundCloud’s fan-powered model may offer a better chance of generating meaningful income. In contrast, Spotify is better suited for established artists with millions of streams, as it requires higher numbers to see significant returns.
Conclusion: It Depends on Your Strategy
In summary, SoundCloud can potentially pay more than Spotify for artists with dedicated fans, thanks to its fan-powered royalties model. For independent musicians with smaller but loyal audiences, SoundCloud offers a more direct and artist-friendly payment structure. On the other hand, for artists with massive streaming numbers, Spotify’s traditional royalty model may lead to larger total payouts, especially when leveraging the platform’s broad audience base.
Ultimately, the platform that pays more depends on the artist’s reach, fan engagement, and long-term strategy. For independent musicians, SoundCloud remains a powerful tool for growing a fanbase and monetizing music.
The Supreme Team is an Austin, Texas promotion agency started by Indie Artists for Indie Artists. Our Organic SoundCloud Promotion and Organic Spotify Promotion is provided through a network of influencers and artists in the United Kingdom, USA, Australia, Germany, Italy, Spain, France, Sweden, Netherlands, Switzerland, Brazil, and more. Be the next viral artist here: SUPREMEPR