SoundCloud, a popular streaming music web service with over 175 million monthly users, has reached a deal to pay royalties to thousands of independent record labels. The music site, which was founded in 2008 and is currently based in Berlin, has been criticized as a haven for copyright infringement.
The New York Times reports SoundCloud crafted a deal with over 20,000 independent labels with help from Merlin, a company which represents the smaller fish in the music industry. SoundCloud became a success story thanks to independent artists and indie-music lovers swarming to the service. The deal with Merlin means the same independent artists that helped put SoundCloud on the map will now get a cut of the revenue.
“Independent creators have always been at the core of SoundCloud, and with this partnership we’re thrilled to extend new revenue-generating opportunities to thousands of independent labels.”
Alexander Ljung, one of SoundCloud’s co-founders, said the quote above.
The deal comes at a time when other streaming music services, like Pandora and Spotify, struggle to maintain a sustainable business model.
Merlin’s CEO Charles Caldas gave The Guardian his thoughts on the partnership as well.
“SoundCloud has carved out a niche not only in functionality but also, I think, in terms of its users and where it sits in the market. This is not another service aiming to be a ‘silver bullet’ for the music industry.
The labels we represent perform particularly well on SoundCloud… It is a meeting point between people who are fans of new music in general, and a lot of adventurous people who are active in the way they curate that music.”
SoundCloud’s advertising system has already generated over $2 million in revenue in its mere year of existence.
The New York Times notes Warner Music, one of the top three record labels in the world, is already receiving cash from SoundCloud ‘s ads. Warner Music is the largest American music company, with revenue exceeding $2.8 billion annually. However, SoundCloud has been unsuccessful in reaching an agreement with Sony Music or Universal Music Group, the other major players in the industry. Showing that Sony Music and Universal Music Group aren’t convinced that a partnership with SoundCloud will be worthwhile.
A partnership with SoundCloud doesn’t just offer revenue sharing, though. If you’re a SoundCloud partner, you’ll have access to their Deck platform, which allows record labels to easily request copyright infringing content to be removed, Billboard reports. But Sony Music’s lack of partnership hasn’t kept them from keeping big names like Adele off SoundCloud , as Inquisitr previously reported.
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