Alexander Ljung has announced via his blog that Soundcloud will be launching a new initiative called On Soundcloud, which allows premium users to monetize their content. At the start, this option will be invite only, to American users, with the plan to roll it out to all premium subscribers.
For the streaming service, it will gain revenue not only from premium subscription fees but also from advertising. There is no information yet, on the percentage that the artist who opted to partake in this opportunity will receive. Ads will be placed or played next to the user’s content.
Soundcloud has often been criticised for creating success for themselves by exploiting the artists with no tangible royalty strategy in place. It’s undeniable that the German based company has created the tools for users to know what effects their material has on the markets, they have been able to view vital statistics about their content like who is listening to their music, where, as well how often this is done. Look deeper and it is clear that this is the type of Quantitative research needed by marketers before offering up anything.
Soundcloud has waited 7 years before launching this 3rd stage of their company’s development. For this type of idea to be successful, you need the audio community to buy into the service and they have done exactly that. The incentive of finally getting paid for ones work is more than enough. With 175 million listeners a month and approximately 250 million registered users, they have primed their market for this new chapter.
Any internet observer could see this coming. Someone has to eventually pay for all the free goodness that is available, at least artists can get paid at the same time. The hard question for the artists is, are they comfortable with becoming rich from advertising rather than talent, some will say, money is money.
What will come under criticism is the fact that that the company will also make equity stakes in the company available to a few “select partners” (read fat cat record labels). This opens the company up to influences, like squeezing out advance payments, which ultimately has an effect on the artist.
Internet ads have invaded all online “free” services, ironically, we will have to pay in order to remove them.