SoundCloud And Universal Music Licensing Deal Halted As Streaming Service Fights Lawsuit

SoundCloud has been put on hold by Universal after attempting to enter a licensing deal with the music powerhouse. This stalling was reportedly caused by a lawsuit in which SoundCloud was being sued for royalties by the UK’s PRS (Performing Rights Society). This lawsuit is only one case of several in which SoundCloud is being pressured to enter licensing deals with all copyright holders.

After a year of extreme growth and becoming a lead streaming source for the EDM music genre, according to the Tech Times, SoundCloud has entered many licensing agreements. Most recently, the streaming network signed a contract with Warner Music Group in which Warner will own a five percent equity.

Due to SoundCloud’s lack of structure and legitimacy for royalty payments, other music industry majors like Sony Music have pulled a Taylor Swift and removed all of it’s content from SoundCloud. In efforts to be one of only a few music companies that get paid sufficiently from content streaming on SoundCloud, PRS made a statement of it’s true reasons for taking legal action.

“After careful consideration, and following five years of unsuccessful negotiations, we now find ourselves in a situation where we have no alternative but to commence legal proceedings.”

The decision to sue SoundCloud came after five years of unsuccessful negotiations, about which PRS recently released a letter to its members. In the letter, the organization gets specific on the root of it’s frustrations with SoundCloud. More importantly, PRS reveals is plans moving forward with litigation.

“Our aim is always to license services when they use our members’ music. It has been a difficult decision to begin legal action against SoundCloud but one we firmly believe is in the best, long-term interests of our membership. This is because it is important we establish the principle that a licence is required when services make available music to users. We have asked SoundCloud numerous times to recognize their responsibilities to take a licence to stop the infringement of our members’ copyrights but so far our requests have not been met. Therefore we now have no choice but to pursue the issue through the courts. “

With over $123 million in investment capital and millions pending if the court’s judgement doesn’t rule in favor of SoundCloud, a deal with Universal could be just what the online doctor ordered. However, it is reportedly for that reason that Universal has stalled the licensing agreement. Nevertheless, SoundCloud has already began preparations for the partnership by removing SoundCloud users who mix music that they don’t own rights to and even caused some Indie labels who used the service to be hit with lawsuits themselves.

As a result of the lawsuit, and the urging of music companies to get paid from SoundCloud, the streaming service is being compared to other taboo services that have recently been under fire for their lack of reasonable royalty payment plans. Until SoundCloud finalizes litigation with PRS and steers clear of other companies who also want to come after them, its potentially life-saving deal with Universal is merely a contingency.

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