SoundCloud's New Monetization Program Could Cause Big Problems for Indie Artists (UPDATE)

The Premier contract includes hazy payment terms and extremely restrictive stipulations.

October 27, 2018

SoundCloud's Premier monetization program is raising many eyebrows.

The newly launched initiative allows creators to make money off their content without any commitments to a third party—such as a record label or aggregator. Though it seemed like an incredible opportunity for independent artists, a new report by The Verge reveals that the program may cause more harm than good.

An up-and-coming DJ named Sweeps provided the publication with a Premier contract, which includes some questionable restrictions and stipulations. We're talking uncertain payment dates, non-guaranteed payment percentages, as well as a mandatory arbitration clause.

Per The Verge:

Not only does the contract prohibit a creator from suing the company, but it also lays out some sketchy terms in regards to the actual payments. SoundCloud promoted Premier with the promise of paying artists on a monthly basis; however, the contract reveals the platform will "calculate your net revenues on a monthly, quarterly, or another accounting period basis as SoundCloud elects to use." It goes on to state SoundCloud's right to withhold payments until an artist reaches $100 in revenue; and if an artist wishes to contest a payment statement, he/she only has six months to do so.

SoundCloud has released the following statement in response to The Verge report:

Yes, the current net revenue share is 55 percent; however, the contract states SoundCloud reserves the right to "at any time and without liability, modify or discontinue all or part of the SoundCloud Premier monetization program."

Music entertainment lawyer Josh Kaplan explains how these terms could cause major headaches for an artist.

"SoundCloud can say, hey we might change this and we don’t have to give you notice other than just posting it on the service," he told The Verge. "Not even an email. You could just wake up and they could say, actually now the share is 25 percent. And if you didn’t check in online on your SoundCloud [account] you would have no way of knowing. How would you know to opt out, until you got a statement? And you don’t know when you’re getting [the statement] because they’re ambiguous about that. It’s up to them when they pay you. And then you get six months to review."

On Oct. 29, SoundCloud posted another update on their blog clarifying the SoundCloud Premier agreement. They removed "the outdated covenant not to sue language" that was in their previous invite-only agreement. They also restated the terms of how SoundCloud Premier operates, explaining any change to SoundCloud Terms of Use that users will be informed two weeks before they make any changes so you can review the changes and agree to them.

You can read the full Premier contract here.