Merlin Adopts Fan-Run Licensing Model As Part Of Global SoundCloud Partnership: “We Are Committed To Putting The Artist First”

Merlin and SoundCloud have officially announced an expanded licensing deal, under which the former company’s indie members will participate in the music-sharing platform’s “fan-driven” licensing model.

London-based Merlin and Berlin-based SoundCloud today announced their just-completed collaboration. For reference, SoundCloud introduced fan royalty payments back in March 2021, and Warner Music Group was the first major label to adopt this framework in July 2022.

Unlike the shared payout model used by Spotify and others, where royalties are pooled and then distributed based on each act’s share of the overall streams, the fan-funded model pays artists as a percentage of users’ actual listening.

A SoundCloud Go+ subscriber who spends 60 percent of their time on the platform enjoying an act’s music in a given month would theoretically pass on 60 percent of that month’s subscription cost (minus the SoundCloud fee) to that artist, e.g Example. The remaining 40 percent of the subscription fee would in turn be split pro-rata among the other artists whose work the person consumed, and revenue from ad-supported accounts would be shared equally.

Jeremy Sirota, CEO of Merlin, addressed the SoundCloud union in a statement, saying among other things: “This partnership offers our members and their artists new revenue opportunities and allows fans to listen to their favorite artists from across Merlin’s global membership directly to support.”

“This collaboration will strengthen Merlin’s community of independent rights holders and give them and their artists the tools to build closer relationships with fans,” concluded former Warner Music executive Sirota, whose company last year signed licensing deals with Pinterest, Twitch and South Korea’s FLO.

In his own remarks, SoundCloud CEO Eliah Seton stated, “At SoundCloud, we strive to put the artist first. The FPR model ensures fairer streaming royalties, helps artists benefit directly from their fans, and opens the door to a more meaningful fan-artist connection.

“I’m delighted that Merlin’s extraordinary community of independent labels and distributors, and by extension their artists, will now benefit,” concluded Seton, whose session partner platform formed a JV label with Kei Henderson’s Third & Hayden in December.

While assessments of the effectiveness of fan royalties in improving streaming revenue vary among artists who don’t have billions of games under their belt, some have had positive experiences with the system.

And with the rapidly expanding selection of AI music likely to further inflate total streams (and dilute the already abysmal per-stream royalties), logic suggests the fan-driven model for professionals with dedicated but not millions of followers could become more valuable on millions of monthly listeners.