The music platform Soundcloud has gained another partner for user-centric streaming billing after the world's third-largest music company, Warner Music. As Soundcloud announced on Thursday, there is now also an agreement with Merlin, the joint licensing platform of more than ten thousand indie labels, with which artists of those labels can also use the alternative billing on the platform. According to Merlin, it has a share of around 15 percent of the global market for music recordings. By way of comparison, Universal and its labels account for 32 percent, Sony 22.1 percent and Warner 16 percent, according to the specialist site Music & Copyright.
The standard for the distribution of all streaming services is the so-called pro rata model. To put it simply, all income is collected and distributed to the respective rights holders according to the market share of a work. In the user-centered variant, users' funds are distributed only among the works they heard. In total, all services each distribute around two-thirds of their revenues to the music industry.
Small compared to Spotify
The way in which the distribution is made and its many consequences have been discussed for years. In March 2021, Soundcloud was the first service – and, apart from a short phase at Tidal, the only service to date – to implement user-based distribution of funds. Although this initially only applied to the approximately 135,000 musicians who upload their music to Soundcloud themselves and also use one of the service's paid offers. Then, in July 2022, Warner announced that performers of Warner labels would also be able to use user-centric billing instead of the pro rata system in the future.
More than 300 million songs are available on Soundcloud, considerably more than on Spotify and Co. Many artists offer their music here for free. In terms of distributions, however, the service is hardly relevant compared to the major services such as Spotify, Apple, Amazon or Youtube Music. Spotify alone paid out more than $2021 billion to the music industry in 7.