Exclusive: Lead architect behind SoundCloud’s “Fan-Powered Royalties” leaves

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Fan-backed licensing architect is leaving Soundcloud

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Photo credit: Future Music Forum

One of the main architects behind SoundCloud’s “fan-powered royalties” system is leaving the company, details shared with DMN show. But efforts are not abandoned.

When it comes to reinventing systems for paying streaming royalties, SoundCloud has been at the forefront. Now, one of the key players behind SoundCloud’s widely publicized shift toward fan-driven (or user-centric) royalties is stepping down.

Michael Pelczynski confirmed to Digital Music News that last week was his last on SoundCloud. Pelczynski was vice president of strategy at SoundCloud, but found himself at the wrong end of the company’s significant downsizing. After a five-and-a-half year tenure, Pelczynski helped shape the royalty-related, economic and commercial backbone of SoundCloud’s transition to a fan-centric royalty payment model.

In short, fan-funded royalties reward artists for direct fan listening, rather than being paid based on fractions of broader, premium subscription and advertising revenue. Other streaming platforms have embraced the concept, although SoundCloud emerged as an early and aggressive proponent of the change.

“With a permanent team of five, I had the opportunity to design and build the industry’s first user-centric streaming model,” said Pelczynski. “The model was not on any roadmap for years. Despite the setback, we continued because we believed in it. We won innovation awards for the model.”

Where is he headed now? Pelczynski says he looks at the current state of the music industry and believes things have reached a critical tipping point. “I have made the decision to volunteer as a free agent and I feel excited and empowered to provide guidance and counsel where I am needed most,” he adds.

With that in mind, Pelczynski says he’s starting an agency to provide the industry with his skills and viewpoint, helping companies solve problems in this wheelhouse. One of the situations he wants to address? Building a new solution that drives consolidation amid the growing fragmentation of music technology.

The question for the broader industry is whether SoundCloud remains a strong proponent of fan royalties. According to Pelczynski, Ama Walton will continue to lead the licensing effort, while John Atzberger will take the lead to manage the commercial and technical advancement of the fan licensing model that Pelczynski helped develop. It may take some time to shake out the rest.

Meanwhile, Pelczynski’s new agency, forms + formsThe aim is to offer strategic advice and guidance to startups, established companies, institutional organizations and aspiring artists alike.

Before joining SoundCloud, Pelczynski led rights management at Warner Music Group. He oversaw royalty payments and reporting across six label divisions with combined annual sales of over $440 million.