Exploitation of Free
Spotify has a free tier but users on the free tier cannot stream music on demand. As a result, they have no control over what they listen to as far as being able to stream a specific song when they want. They can stream playlists and they can stream an artist’s catalog on shuffle, but they can’t stream on demand. Youtube is free but monetization is iffy. Artists aren’t paid for every view on Youtube, they’re paid a percentage of revenue earned from a view of an ad. If a viewer doesn’t watch an ad, there’s no revenue to split. All users have the option of skipping an ad after 5-seconds have passed. An artist can generate a million views and if all users skip the ads the artist won’t earn a dime.
Soundcloud monetizes free listeners with ads but ads can’t be skipped and the platform pays a percentage of revenue based on an artist’s total number of streams. Revenue is pooled together and split between all artists so every play is monetized which contrasts Youtube’s system. Unlike Spotify, Soundcloud users can stream songs on-demand so a free user can stream an artist’s music just as much as a paid user.
With the combination of monetization and listener access, artists can benefit from all traffic driven to Soundcloud. Through Soundcloud’s Fan Powered Royalties, artists can make more from fewer listeners if they can manage to dominate their time spent streaming. The tools Soundcloud provides and the access to listeners make cannibalizing a fan’s streaming time easier than other platforms.
Soundcloud Monetization & Tools
Direct uploads
Because you have the ability to upload whatever you want whenever you want, it can be used as an effective promo tool and means of re-engaging your audience.
You could upload audio discussing the creation of a song, breaking down the lyrics of a song, talking about the inspiration for a song, etc. That content will work to drive listeners back to the song and your catalog. Because it’s just audio, creation is super low maintenance. Artists could record audio messages on their cellphones using an app like BandLab.
Soundcloud Go
The Go Subscription tier reduces competition in the marketplace because a lot of artists restrict access to their music to users paying for Soundcloud Go. The music of those artists isn’t available to listeners on the ad-supported tier so there’s less inventory for playlists. This results in a focus on indie music which increases your chances of exposure as an indie artist.
Feed
The same way people have a feed on social media platforms like Twitter and Instagram is the same way they have a feed on Soundcloud but there, it’s called a “Stream” The Stream is where users get content from all the artists they’ve followed. Post a new track and it shows up in users’ Stream, Repost a track and it shows up in users’ Stream. The Stream/Feed gives you a means of maintaining contact with your Followers on the platform through publishing new content.
RealEstate
Growing your following on Soundcloud turns it into an asset that can be monetized in a number of other ways:
- Reposts – You can charge other artists to Repost their music where you’re effectively promoting it to your fans.
- Playlists – Like a Repost because it gets pushed to users’ Streams but it’s not focused on one specific artist.
- Description box – You have control over what’s posted to your description box and can use it to post links to other artists’ music for a price.
- Timed comments – Shoutouts in your tracks, Timed comments can also be a revenue source.
- Features – Taking the most effort, this would be the biggest money driver. With the way algorithms work, an artist with a following on Soundcloud collaborating with another artist gets them into the algorithm which benefits them exponentially. It will get them on algorithmic playlists, user-generated playlists, and alter the perception fans have of their music.
Soundcloud Monetization
Standard – How it works
Monetization on Soundcloud works by subsidizing free listeners with advertising and charging a Subscription fee for Soundcloud Go. Revenue is pooled and artists are paid a percentage of revenue based on their perception of the total number of streams. If there’s $1,000 in revenue and you account for 10% of the total number of streams, you get $100. Revenue from ad-supported streams and subscription streams are separated, which is why some streams earn more than others.
Only streams that take place on the Soundcloud website or mobile app are monetized but Soundcloud has an API – basically a connector – where online radio shows and podcasts can source music from the platform. Artists do not earn revenue from Podcasts and radio shows sourcing music from Soundcloud. Additionally, Soundcloud operates in countries where monetization isn’t available so if you rack up streams in one of those countries, you won’t earn anything for them. Here’s a list of the countries where Soundcloud monetization is available:
US, UK, Canada, Australia, France, Germany, Ireland, The Netherlands, New Zealand, Spain, Switzerland, Portugal, Belgium, Italy, Austria, Sweden, Norway, Denmark, Finland
Fan-Centric – How it Works
Soundcloud’s Fan-Centric Royalties rewards artists for having dedicated fans that primarily stream their music. It’s only available to artists with a Soundcloud Pro Unlimited account or those using Repost by Soundcloud digital distribution. If you’re a Soundcloud Pro Unlimited or Repost user your music is automatically enrolled in the program.
What Fan-Centric payouts do is separate the revenue generated by artists on Soundcloud Pro Unlimited and Repost from the revenue pool. That revenue then gets split between Soundcloud Pro and Repost artists based on their percentage of the total number of streams of each user. If I’m paying Soundcloud $10 for Soundcloud Go and 90% of my streams are of your music, you get $9 from me. This could be 9 out of 10 streams, 90 out of 100, or 900 out of 1,000 because it’s all 90%. The amount of streams is secondary to the percentage. This contrasts the current streaming monetization structure where you could account for 90% of an individual subscriber’s streams but 0.001% of the total number of streams where you’d earn 0.001% of the revenue.
Under Fan-centric, you could get 20 streams and makeup 20% of a user’s listening, earning $2 of their subscription fee. Spotify on average pays about $0.004 per stream so earning $2 would take 500 streams. In Soundcloud’s Case studies they highlight artists like Vincent that went from making $120 per month to $600 per month under Fan-Centric.
GETTING THE MOST OUT OF SOUNDCLOUD
Windowing
If fans want access to your music they’ll go where they can get that access. When you drop a new song fans are thirsty to hear it and that is the biggest opportunity to drive them to a particular place or platform. Kanye West created a rollout for one of his albums called “Good Friday” where he released a new track every Friday exclusively on his website. Anyone that wanted to hear the tracks had to go to his website to listen until they were available everywhere else. Windowing is effectively a limited exclusive where you’d only have the track available on Soundcloud for maybe the first 2 or 3 weeks of its release before it’s available on other platforms.
Advertising
Soundcloud allows artists to advertise directly on the platform. Targeting is a bit broad and they don’t allow advertisers to drill down by targeting similar artists but it can still be really effective with the right song. Provided your song isn’t incredibly niche to the extent that music fans outside the niche are unlikely to find it appealing, targeting Hip Hop fans with an Underground Hip Hop record shouldn’t be such a stretch.
Ads appear in users’ “Stream” which is like a social media feed on Soundcloud. Anybody checking their Stream is probably an active and engaged Soundcloud user which makes them a valuable listener.
Run Soundcloud Direct ads
Run Facebook Ads directing traffic to Soundcloud by having the destination link be a link to the track on Soundcloud. Add the requirement that everyone in your target audience be someone that has Liked the Soundcloud profile page as well as be a fan of your genre, similar artists, or style of music.
Frequent releases – catalog
To dominate a user’s listening time it’s going to take a catalog. The more songs in a user’s playlists, algorithmic playlists, etc. the more streams you’ll get from that user. The cycle with a listener tends to be, they find out about a new song and stream it a lot then the track gets added to their collection where they engage through playlists because that’s what it means to get added to someone’s collection in the streaming era.
Recouping
The Price of a Soundcloud Pro Unlimited account is $144 annually or $16 per month. You’d need to account for 20% of the listening time of 8 users paying $10 for Go.
