SoundCloud may soon let you tip your favorite artists

It would be the first streaming platform to introduce tipping.

Two musicians performing on a stage, in front of a SoundCloud logo.
Slaven Vlasic/Getty Images Entertainment/Getty Images

SoundCloud, long considered the YouTube of audio, may soon allow fans to send tips directly to their favorite artists. The information comes from Billboard, which says SoundCloud is searching for new ways to generate revenue as it competes for attention with major platforms like Spotify and Apple Music. No major platform currently offers tipping.

Crowded market — While SoundCloud has always been synonymous with remix music and the creation of "SoundCloud rappers" — the likes of Lil Uzi Vert and Juice WRLD got their starts mixing music on SoundCloud — the platform has lost some of its luster in recent years and never reached the heights of its competitors. A rise in remix copyright takedowns didn't help. It's been trying hard to differentiate itself by sticking to its indie roots and launching useful premium tools, like the ability to cross-post songs to multiple other services.

SoundCloud currently makes money through two ways: a listener-focused monthly subscription service that gives users access to a large catalog of music, as well as creator-focused premium services. But competing for listeners is already a done game, so focusing on creators and providing them more tools to succeed may be its way forward. Late last year it reported that its creator-focused business is growing faster than listener subscriptions.

Indie appeal — By allowing users to directly contribute to their favorite artists, SoundCloud could help indies who are particularly struggling during the pandemic. For smaller acts, concerts are a major source of revenue stream and the money they receive from streams is a pittance because subscription is divided up proportionally. The biggest artists who account for the most plays suck up most of the money, a fact that has caused many to resent Spotify as artists find that millions of listens only net them mere pennies or dollars.

Other platforms have been trying to help out artists through the pandemic, notably indie favorite Bandcamp. The website last year launched a streaming concert feature where musicians set their own ticket prices and the company itself takes 10 percent of proceeds. Spotify for its part allows artists to sell merchandise through its platform to supplement their income. The service works through a partnership with Merchbar, which doesn't disclose the commission it takes.

As Spotify focuses more on podcasts to generate future revenue, SoundCloud could find its niche in focusing on helping small artists succeed.