Building a fan economy with Fan-Powered Royalties

Music streaming has helped the music industry return to growth over the past decade, but many creators feel left behind. The streaming economy has reached a point where the creator remuneration gap can no longer be ignored. It is no secret that many music artists are dissatisfied with the relationship between the consumption of their music on streaming platforms and the income they receive from it. The system determining how artists get paid (as well as how much they get paid) from streaming has also been the subject of long debate. The traditional ‘pro-rata’ model brings all streaming income into one pot and then distributes it based on the artist’s (and associated rights holders’) share of total consumption. Furthermore, every stream receives equal weight, whether the consumer is a passive listener or a superfan. The unintended consequence is that the value of an artist’s fans has become a lower priority than the volume of streams that they are generating.[..]

Based on data comparing FPR pay-outs to what they would have been in pro-rata, we have examined the mechanism behind FPR and uncovered the foundation of a new fan economy that ‘corrects’ much of the inequity and misguided incentives under the pro-rata model. FPR presents opportunities for artists of all career stages to reimagine their relationship with their fanbases – especially their most loyal fans. Perhaps most important of all, we see FPR not as an end in itself, but the foundation stone for a new music business that is built around artists, their fans, and recognition and remuneration.

• The majority            the            sample that MIDiA analysed            are currently in FPR are            off under FPR than pro-rata
• FPR has            more artists to move up            higher income brackets, with a            in artists earning over            in                       period between April 2021 and            2022
• Artists want            be able to find fans            make a living from their            instead of chasing fame and            FPR has helped            of artists                       fans earn more from their            than pro-rata
• Artists who            more under FPR received            of            income from their superfans (those            contribute more than            a month)            a category that makes up            their total audience
• FPR incentivises            rewards artists who are not            building but also monetising their           
• Superstars with            audience of over            typically have            smallest share of superfans, at            FPR’s incentives, they have the            opportunity to engage and grow            superfans
• FPR rewards            of fans, not quantity of            catching out inauthentic bots and            who are paid to repeatedly            There is less incentive to            the system’, thus facilitating authentic           
• FPR’s greatest            is the insight that it            into artists’ biggest contributing fans,            artists better monetise their fans            navigate the industry-wide shift towards            fragmentation. Unlocking deep fan insight            up the opportunity to build            fan-centred music economy that is            on fandom and the audience’s            contribution

Note: Throughout this report we refer to creators, artists and / or music artists – we use these terms interchangeably referring to all artists currently distributing their music on SoundCloud. 

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