SoundCloud updates the way it pays artists after facing public criticism

Sound Cloud is changing the way it pays users under the Premier program after facing criticism for allegedly not paying artists fairly, and for having questionable contract terms.

In the past few weeks, SoundCloud expanded the scope of its Premier program to include artists paying for the Unlimited account and the SoundCloud Pro services. Essentially, the Premier program is how SoundCloud pays artists for the revenue made from their recordings.

Some legal experts criticized the Premier program for waving the artist’s right to sue the company. This is problematic for music creators because SoundCloud has full discretion to disseminate or recreate the artist’s work without a license. To put this in perspective, on other music hosting platforms such as Spotify, those who sign with the direct-upload beta program (DRCT Beta) are not exempt from taking legal action if they feel that their intellectual property was infringed.

Experts also note that the language used in the program’s Terms of Service are vague to the extent that those making under $100 will not get paid until they prove their music is worth more. In addition, SoundCloud’s payout may change at any time without the artists knowledge.

SoundCloud recently responded to the criticism in a blog post, claiming that the company allows artists to retain the rights of their intellectual property. They laid out a revised and more explicit version of the Premier program agreement:

1) You retain all of the rights to your content

2) You receive a pro rata share of 55 percent of net revenue

3) You are paid for each calendar month within 45 days of the end of that month, regardless of how much you earn

4) You have the freedom to exit the program whenever you wish, and can always use any other platform alongside SoundCloud

5) As with any change to SoundCloud Terms of Use, you will be notified two weeks before we make any changes to this agreement so you can review the changes and agree to them

The company praised the benefits of the program, and avoided discussing the “don’t sue” clause. The statement reads:

“The SoundCloud Premier monetization program operates on a fixed net revenue share of 55% and monthly royalty payments paid net 45 days to creators, which exceeds most other platforms.”

“SoundCloud Premier is completely non-exclusive, the creator always retains all their content rights, and reserves the right to exit the agreement at any time.  We are always looking for ways to simplify our agreements for the benefit of our creator community, and will take the opportunity here to avoid future confusion.”

The company addressed that it might scare off music composers with the “don’t sue” clause, which is why it has removed it from the agreement contract.

“Our team reviewed the agreement, and we’ve clarified or removed elements that may be unclear or not relevant to the open service we have now – this includes the removal of the outdated covenant not to sue language that was part of our previous invite-only agreement.”

“As with any change to SoundCloud Terms of Use, you will be notified two weeks before we make any changes to this agreement so you can review the changes and agree to them.”

Several legal issues remain that weren’t made clear in SoundCloud’s blogpost. It’s still not clear if artists can sue the company for license breaches, or if artists deal with cases of arbitration. Some argue that the company has found a new way to hand over their rights as content creators of intellectual property.

Nonetheless, SoundCloud says it hopes to maintain its status as a “creator-first” platform. Only time will tell whether they hold themselves to that.