According to music industry insiders, SoundCloud is about to announce a licensing deal with label giant Universal Music Group (UMG), granting the major some significant equity–and serious power–in the streaming service.
The report, originally published in Music Business Worldwide citing sources close to SoundCloud, comes after a recent crackdown on copyrighted material on the platform, with users increasingly seeing tracks, mixes, and even entire accounts deleted due to suspicions of copyrighted content that hasn’t been cleared for use, leading to speculation that the deal and the takedowns are linked.
UMG is, by some distance, the largest of the three remaining major labels–and if the reports are correct, the second one to strike a deal with SoundCloud following Warner Music’s in November 2014–so it stands to reason that any agreement they make will be as close to their terms as possible. Insiders report that while Universal is indeed demanding a higher equity stake than Warner–who took five percent–they are aware that it could also be in their best interests to keep the SoundCloud name alive and well. Put simply, one major streaming service is far easier to check and control than the dozens that would pop up if SoundCloud went under.
It would seem that UMG is looking to strike the right balance between free and premium content, as label boss Lucian Grainge, a vocal detractor of freemium content in the past, said in an interview with Hits magazine last week.
“While ad-supported on-demand music definitely has a place, whether that’s as part of discovery or trials of new products and offerings, freemium alone is inadequate to support our critical ecosystem of artists, labels and the platforms themselves. What that means is that we must seek the proper balance between ad-supported and paid subscription. It’s not one or the other. With the two approaches in proper relationship, we can continue the level of investment we make in artists who then, in turn, can be fairly compensated for their work. If we get that right, everyone wins. That’s what we’re working towards.“
The development would mean that SoundCloud only has to secure an agreement with Sony to have all three majors on board, though this may prove difficult, as Sony pulled music from SoundCloud by some of its biggest artists back in May, a move which led Sony artist Madeon to accuse the label of “holding its artists hostage.”