Soundcloud has Signed a Licensing Deal With Sony Music

SoundCloud - Licensing Deal Signed with Sony Music

According to sources with information of the situation, licensing deal has been signed with Sony Music by SoundCloud, providing its deals with all three main labels, making way for the subscription service it had scheduled to launch later this year. It is said that Sony Music would be getting equity from SoundCloud in the deal.

As per the agreement SoundCloud will give access to Sony Music artists comprising of Beyoncé, The Weeknd, Future, Calvin Harris, Bruce Springsteen, Foo Fighters, Miguel and Justin Timberlake. The streaming music service intends to launch a paid subscription plan and a source close to the situation informed that the deals SoundCloud had struck with the majors does not permit it to build a full on-demand service akin to Spotify or Apple Music.

It is said that SoundCloud has already struck deals with Warner Music Group, Universal Music Group as well as Merlin, an independent network of labels; Sony Music had been the last holdout. But obtaining a deal with Sony Music had been challenging. According to Billboard, the label pulled its music of SoundCloud last year when the reports revealed that Sony Music had not been happy with the lack of monetization opportunities.

A Mid-Tier Service

Since the deal is done and SoundCloud has obtained the blessings of the music industry, it needs to figure out how to monetize the services without isolating the 175 million users who seemed to be using it without any cost.

 According to sources, it is said that the company seems to be serious regarding monetizing the service and one industry source has informed The Verge that they need to make this work if SoundCloud has a long term future. Initial discussions had SoundCloud’s paid offering at $10 a month when it launches later this year. There had also been talks of a mid-tier service which were priced less than that.

Together with the excess of songs which live only on SoundCloud already, SoundCloud tends to have an advantage over competing streaming services that largely offer the same music catalog. SoundCloud had refrained from commenting on rumours and Sony Music did not respond to request for comment.

Goal of Launching Subscription Tier

Sealing a related pact in January with No. 1 recording company Universal over its 2015 deal with Warner, Sony agreement seemed to the final obstacle between SoundCloud and its goal of launching a subscription tier. SoundCloud known as the YouTube for audio draws a great number of music listeners online though in the past it has annoyed the music due to its early reputation of being careless with regards to royalties.

SoundCloud had experienced some of the same industry tension which YouTube had encountered while it handled to manage unauthorised uploads of copyrighted material at a particular site where the users can upload their own sound files. This made it difficult for SoundCloud to repair deals together like Sony and Universal. But service’s growing popularity made it difficult for the music industry to tune out. SoundCloud presently has a limited advertising business and intends to introduce subscription services in the U.S. as well as other markets later in the year.