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

Download PDF to read the full report.