Soundcloud has finally worked out licensing deals with U.S. music labels. As part of the
agreement, ads will be introduced to the service for the first time and artists will now be
able to collect royalties from plays of their tracks on the service. SoundCloud's CEO Alex
Ljung hailed the introduction of ads as a move in the right direction. The new revenue model
is an "important step" for artists who use the platform, Ljung said in a statement on the
company's blog.The program for artists to make money from their own work is currently
only available to a small group of "premier" members. "Over time we will roll this out across
the creator community," Ljung said. The announcement is a good indication that SoundCloud
may be moving forward with talks reportedly held last month with major music labels about
receiving equity in exchange for agreeing not to sue SoundCloud over copyright infractions.
Sources familiar with the negotiations claim that Universal Music Group, Sony Music Entertainment,
and Warner Music Group are are seeking up to 5% of the German company.
A new licensing scheme with music labels could mean that more big-name American
musicians will begin using the service. While SoundCloud already counts Skrillex, Snoop
Dogg, and Madonna among its users, many U.S. music labels have criticized the service
over its policy that allows SoundCould users to upload tracks to the without asking for the
owners' permission — unlike European rival Spotify.
SoundCloud has been keen to distance itself from Spotify, the other big European music
streaming platform. The company revealed last year that users listen to 90% of tracks
uploaded to the site, with the majority played within an hour after they are posted online.
In contrast, users only listen to 80% of tracks uploaded on Spotify. Unlike Spotify, many
musicians are uploading their music direct to their personal SoundCloud profile, often
bypassing their music label in the process. SoundCloud has also built a reputation for
playing host to a large amount of remixes, with popular musicians often reposting and
sharing remixes and cover versions found through the site. Many musicians and fans
find SoundCloud's following system to be more like a traditional social network rather
than a streaming site.
Source: Business Insider