Soundcloud Reportedly Agrees to Licensing Deal with Universal

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SOURCE: MUSIC BUSINESS WORLDWIDE

Soundcloud is nearing a monumental deal with Universal Music Group.

The two have been in talks for months, with Universal appearing to end up with the upper hand. The deal is the fourth that Soundcloud has secured with major music rights-holding organizations since their launch. The first, with Warner Music Group last November, gave artists and labels three options after their music was detected on the platform: mute its audio, block the track, or choose to monetize it with ads. The second was a licensing agreement with the NMPA in May. The third was a similar deal with Merlin, which represents 20,000 independent labels worldwide, in June. All four deals, including UMG’s, were secured with a guarantee from Soundcloud that they would create a paid-subscription service.

Universal’s deal with Soundcloud includes an equity stake that they leveraged with their vast repertoire of music. It was pretty much in Universal’s hands when they realized that they either get their say in their deal or the powerhouse music company would drop out of talks completely. “Universal had a couple of aggressive choices: they could either sue SoundCloud, which wasn’t off the table, or refuse to play ball with them and watch them slide out of existence as money ran low,” a representative closely tired to Soundcloud explained. Warner currently has 5% of equity in Soundcloud and UMG is reportedly asking for more.

The only label left to associate with the platform is Sony, which was already outed for its unfair advance policy with Spotify. No matter what happens, we hope the agreement won’t interfere with Soundcloud’s consumer experience while still providing the proper royalties to artists. Currently, Soundcloud pays around 166k a month in royalties following their recent ad-integration.

Read more about UMG’s deal with Soundcloud here.

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