How Do Music Streaming Services Pay Musicians? Pro Rata vs User-Centric Royalties

In this video we look at the two current payment models used by streaming services to payout royalties: the dominant market centred payment system (MCPS), and the, as yet only used by Soundcloud, user centred payment system (UCPS).
Despite research and much discussion about user centric payment models over the past few years, until this year, no platform has ever rolled them out.
Enter SoundCloud, the first streaming service to implement user centric royalties, under the name "fan powered royalties".
How do these models work and which one is the fairer model overall? Watch and find out!
Buy Me Coffee: ko-fi.com/hemusic
Sources:
“Pro rata.” Merriam-Webster.com Dictionary, Merriam-Webster, www.merriam-we.... Accessed 5 Oct. 2021.
pitchfork.com/...
cnm.fr/le-cnm-...
#UserCentricRoyalties, #MusicRoyalties, #SoundCloud, #ProRata, #MusicStreaming, #FanPoweredRoyalties,

[@WhatDoesEvilMean]

1) It’s so weird that musicians gave their music away to streaming. 2) To me the most broken thing about streaming is that it’s focused on streams, not minutes played. Streaming companies are literally robbing the musicians based on this alone.

[@blackspells]

Finally a video I can show people I fail to explain what i think is the only thing wrong with streaming in my opinion. In the long run the user centric system will honor the art of creating music because it’s not necessary anymore to keep the playtime of a song low to gain more streams or to produce solely to fit in certain playlists.

[@LofiCult]

Best explanation for the difference between pro rata and user centric on the whole internet 👌 thanks, this deserves a sub.. looking for more 🙂

[@happilyevermusic]

Thanks!

[@aidenschwartz9008]

this is a super helpful video im genuinely surprised you don't have thousands of subscribers

[@happilyevermusic]

Thank you so much for your comment :) I'm really glad you found it useful. I'm just getting started, so hopefully some day!

[@Fred-ik9jz]

Great video and very well explained! Small note: 9:30 217% increase means she more than 3x her payout. 0% increase if 1x (the same), 100% increase is 2x, 200% is 3x, etc.

[@ZoloniusGames]

Dude, awesome video! the information, explanations and examples we're beautifully put. Im also surprised that you dont have a bigger following because your video was beautifully put together! I think I also spotted some elements in the video that you put together and organized, which some people mightve not realized which I thought was clever! Great job brotha, and thank you for enlightening me and others on the subject!

[@happilyevermusic]

Thank you for the kind words, I’m glad you found the video helpful 🙂 I’m definitely still figuring this whole KZbin thing out but knowing I am producing content that is helping people keeps me going!

[@damrecmusicproductionstudi9103]

User-centric is a step in the right direction. I wonder what platforms will roll out next - selling music rights maybe (see tangymarket, royalty exchange) Great video 👍

[@happilyevermusic]

We definitely see a lot of big artists selling the rights to their catalogues - for some, a tidy lump sum could be the answer for sure! Read a recent op-Ed in Music Business Worldwide by Stef Van Vugt suggesting per second royalty payouts, especially for TikTok and such rather than a flat fee, which is an interesting idea and definitely in line with sync for films and television.

[@dreamerdespierta]

This is a great video! Thank you for explaining so eloquently 😊

[@happilyevermusic]

Glad it was helpful!

[@theobsidiancomplexofficial7318]

Thank you for taking the time to make sure a helpful video!!!! You’re an amazing human being. More people definitely need to speak on these things 💪🏼💯💯💯💯

[@isonarc]

this video is very helpful and explained better than articles online 🤞🏽

[@happilyevermusic]

I’m glad you enjoyed it!

[@SquidsInkDrums]

Genial explanation, thank you! Now i understand how and why..

[@Snail_Slowly_Moves]

damn dude you deserve more subs and views

[@happilyevermusic]

Cheers!

[@ngoniebauer]

I just stumbled on this video and I like how you are well versed in the subject. Would like your input on a streaming platform I am working on.

[@liberianmusic3312]

This was really helpful 👏 🙂 👌

[@happilyevermusic]

Glad to hear it!

[@sammywilliam8156]

Love this guy

[@happilyevermusic]

Love this comment!

[@vanessalandrock]

thank you for these helpful explanations :)

[@happilyevermusic]

You are very welcome 🙂

[@redcurrantrecords]

Yes it's worth it.

[@OmozeeOfficial]

Thanks for this.

[@sorry11303]

1:13 sorry sir heard you loud and clear 👂☑️

[@MissionNSYNC]

does anyone know - is it ok to buy more than one physical copy of albums at a brick and mortar store in 1 transaction? or should it be separate, so it counts as more unit sales?

[@happilyevermusic]

Unit sales would be counted per album sold. If you buy 5 copies, that’s 5 units sold.

[@mattcatlover333]

Tidal does it now too

[@happilyevermusic]

True story. It's only on their HiFi Plus tier if subscribers sign up directly through Tidal Music - if they register through a service provider then fan-centred royalties won't be paid out, for whatever reason. But, it is a start!

[@asterisconuevenueve]

🙏🏼🙏🏼

[@ginagodfrey2440]

I am Kelly hahahaha \m/

[@surreallane9730]

nothing makes me more mad knowing my bias isn't the one being paid

[@robinhoodmacha9085]

If I want to make a app like tiktok or instagram reels , then the music used how shall I get those music in my app ? Is there any distributor to gives a API for adding music

[@happilyevermusic]

As far as I know, there isn't a publicly available API that you can just plug into an app to allow users access to licensed music - as there is no one-stop location for licensing all music for use on social media sites, I would expect that there would be no one API that has access to all the libraries of all the distributors in the world. Don't quote me on this, as I am not an app developer. What I can tell you is that if you want to make popular music available through your app, you will need to license it from the various distributors out there, and will likely need to come with a serious proposal for how said you would compensate the use of the tracks on your platform. Given that Epidemic Sound is currently suing Meta over copyright infringement and Kobalt Music has pulled their music from Meta because they couldn't agree on a new licensing deal, I'm guessing you will need to have a fairly strong position to get to the negotiation table. Good luck!

[@CharlesSeraphDrums]

Qobuz and Tidal are user-centric

[@happilyevermusic]

At the time this video was made Soundcloud were the first to adopt user centric royalties. Tidal introduced it towards the end of 2021 and dropped it before the end of 2022, I suspect without ever having actually rolled it out. Here's a video about that: kzbin.info/www/bejne/iHfXiWiCqc1ph9k All the data I have suggests that Qobuz is paying using a market-based approach just like other DSPs - if you have some information I don't have I would love to see it!

[@Wongwongwong10000]

Napster and other illegal music software were first. MP3 files and you could download any music you wanted for free. Musicians were outraged when millions were stealing music for free. Metallica and others sued got them shut down and thought everything would be normal. People would purchase music and that’s it. Then Apple came out with their iPods and iTunes and Apple changed the way you listen to music. Other companies started their own iTunes like music stores. Then came music streaming services like Apple Music and Spotify. Musicians got ripped off by big companies. Now musicians are upset that they don’t get paid enough by those services and say they would rather have the old way back. But if they came to terms with music downloads back in the day, and music companies paid Napster and others for legal services. Streaming music wouldn’t be an issue because laws would be in place to pay the artists. Musicians are not business people and screwed themselves and it’s too late to get their money.

[@BlakeBlackstone]

The best bands are the bitter and hungry ones that don't make much money and are under-appreciated. I say pay them less for the sake of the art. The cream will always rise to the top.

[@happilyevermusic]

😂 oh, the starving artist theory… I’m not sure it holds up to scrutiny though. I think it’s more likely that those that do end up financially well off can find themselves at odds with the meaning and content that made them famous… those that manage to reconcile that tend to have pretty solid careers.

[@robertkiss7003]

No f**king way i’m paying for such services. Period.

[@DJDARYL]

None of it makes any sense.