Sources: SoundCloud is preparing to introduce a new payment system that would allow users to pay artists directly
Micah Singleton / Billboard :
Context & Ripple Effects
SoundCloud's payments story has always run through intermediaries. After signing its last major-label licensing deal with Sony Music in 2016 — clearing the way for paid subscriptions — the platform built monetization on top of label and publisher deals, including a leaked arrangement paying publishers roughly 22% royalties (about 22% royalties to publishers), and later widened access through an invite-thresholds program requiring 5K monthly streams (expanded monetization program).
A direct user-to-artist payment system reported by Billboard's Micah Singleton would be a structural break from that stack: money flowing listener-to-creator without passing through the royalty pools negotiated with the three majors whose deals made the subscription service possible in the first place (Sony Music, the last of three major labels).
First-order effects
- Artists on SoundCloud gain a revenue line independent of the stream-count thresholds and royalty splits of the existing monetization program, while fans get a direct payment rail inside the platform.
- The major-label licensing framework that underpins SoundCloud's subscriptions now coexists with a channel where label intermediation is optional rather than required.
Second-order effects
- Rival platforms built on pooled-royalty streaming face pressure to add direct-support features, since direct payments let smaller artists earn without hitting minimum-stream gates.
- Labels and publishers lose a measure of pricing power over how creator revenue is split, as platforms that own the fan relationship can route money around licensed catalogs.
Third-order effects
- If direct fan payments prove out at scale, music platforms shift from gatekeepers who distribute a shared royalty pool toward marketplaces where creators set their own ask — weakening the leverage that catalog licenses confer over platform economics.
The trend: Music streaming is layering direct artist-monetization rails on top of label-licensed subscription models, shifting bargaining power toward platforms that own the fan relationship.