SoundCloud Unidentified Content

In addition to streaming royalties accounted to you for plays of your official tracks on SoundCloud Go, you may also see additional revenue reported on your statements as breakage under SoundCloud Unidentified Content.  These payments relate to streams of user-uploaded content that SoundCloud has been unable to identify as belonging to a specific rights-owner – so the money goes into a pool which is periodically shared out to all SoundCloud’s commercial partners based on overall market share.

In most respects SoundCloud accounts royalties just like any other streaming service. Revenue is generated through a combination of user subscriptions and advertising sales.  That revenue is pooled and then divided by the total number of qualifying streams in a given month to derive the per-stream royalty rate which is paid as a license fee to the rights-owners.

For the official tracks we deliver directly – with comprehensive metadata and rights information – that’s a relatively straight-forward process.  However, unlike Spotify, SoundCloud is predominantly an audio sharing service and the vast majority of the content available on their app is user-uploaded.  Their systems can’t possibly identify every single user-uploaded track accurately. So who should be paid for streams of the unidentifiable tracks?

The royalties allocated to an unidentified track go into a separate pot.  SoundCloud then uses market share data to divide this revenue pool between rights-owners.  When we receive our share of this pot, we account it back to labels by using historical sales data to calculate a pro-rata share for every track that was streamed on SoundCloud Go in the same period – in accordance with our breakage policy.