Major Architect Behind SoundCloud’s ‘Fan-Powered Royalties’ Departs

fan-powered royalties architect leaves Soundcloud
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fan-powered royalties architect leaves Soundcloud
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Photo Credit: Future Music Forum

A major architect behind SoundCloud’s ‘fan-powered royalties’ system is departing, according to details shared with DMN. But the effort isn’t being abandoned.

When it comes to reinventing streaming royalty payment systems, SoundCloud has emerged as a frontrunner. Now, a major player behind SoundCloud’s heavily-watched shift towards fan-powered (or user-centric) royalty is stepping aside.

Michael Pelczynski confirmed to Digital Music News that last week was his last at SoundCloud. Pelczynski served as the Vice President of Strategy at SoundCloud, but found himself at the wrong end of the company’s substantial headcount reductions. After a five-and-a-half year tenure, Pelczynski helped forge the royalty, economic, and commercial backbone of SoundCloud’s shift into a fan-focused royalty payment model.

In a nutshell, fan-powered royalties reward artists for the direct listening behaviors of fans, instead of paying based on fractions of broader, top-level subscription and advertising revenues. Other streaming platforms have entertained the concept, though SoundCloud emerged as an early and aggressive advocate for the shift.

“With a tight team of five, I had the opportunity to architect and build the industry’s first to market user-centric streaming model,” Pelczynski relayed. “The model was not on any roadmap for years. We pushed on regardless of the pushback because we believed in it. We won innovation awards for the model.”

So where is he headed now? Pelczynski says he’s considering the current state of the music industry, and believes things have reached a critical inflection point. “I’ve decided to engage it as a free agent, feeling elated and empowered to be advising and consulting where I am most needed,” he adds.

With that in mind, Pelczynski says he’s setting up an agency to offer his skillsets and vantage point to the industry and to help companies solve problems in that wheelhouse. One of the situations he hopes to address? Building a new solution that forges consolidation among music tech’s growing fragmentation.

For the broader industry, the question is whether SoundCloud remains a bull-charging proponent of fan-powered royalties. According to Pelczynski, Ama Walton will continue to lead licensing efforts, while John Atzberger will be taking the reins to manage the economics and technical evolution of the fan-powered royalty model that Pelczynski helped establish. The rest may required some time to shake out.

Meanwhile, Pelczynski’s new agency, Forms + Shapes, aims to provide strategic advice and counsel to startups, established companies, institutional organizations, and emerging artists alike.

Prior to joining SoundCloud, Pelczynski directed rights administration at Warner Music Group. He oversaw royalties and reporting across six label divisions, totaling more than $440 million in annual revenue.