Warner Music adopts SoundCloud’s user-centric revenue model

Photo by Amelia Holowaty Krales / The Verge

Warner Music Group has cut a licensing deal with SoundCloud to adopt the streamer’s Fan-Powered Royalties system, which allocates royalties based on individual user listening and is thought to be more artist-friendly. WMG is the first major label to adopt the system, and its embrace of the model could signal a larger shift for the industry.

SoundCloud made waves last year when it introduced the new payout model in which money paid by subscribers is allocated to artists they actually listen to. That may seem like a no-brainer, but it is far from the industry standard. The pro rata model, which is used by industry heavyweights like Spotify and Apple Music, pools all subscription money and divvies it up based on total streams across the…

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