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SOUNDCLOUD SIGN A DEAL WITH WARNER BROS, AND SPICE UP THEIR BUSINESS MODEL A BIT

SOUNDCLOUD SIGN A DEAL WITH WARNER BROS, AND SPICE UP THEIR BUSINESS MODEL A BIT

Lots of you may already know about Soundcloud. The chance is pretty high, seeing as the site has 175 Million users each month. Recently, Soundcloud has been taking steps to make themselves a more legit music streaming services. Back in August, they announced a program to allow certain users to monetize their content, kind of like what YouTube is doing right now. The invite-only users would be able to put pre-approved advertisements at the beginning of songs in order to generate revenue. The company’s chief business officer said according to Billboard:

“This is where we start to figure out how to generate revenue and help our creators make money in order to enable them to build careers with us. When Alex [Ljung, SoundCloud’s CEO] and Eric [Wahlforss, SoundCloud’s CTO] founded the company, they really saw an opportunity to build a business with a global, open platform that would kind of evolve over time.”
"SoundCloud is not just a service that depends on the majors only—although we do work with them and hundreds of their artists all the time, and we’d obviously love to have them onboard, but there is a much broader creative ecosystem here and we’re really keen to represent that in a full and complete way."

Not only are they taking steps to include smaller users of Soundcloud, but they’re trying to further monetize their service. They also announced in the same Billboard article

"a paid subscription service is expected to be launched in the coming months, which is where agreements with the majors and other labels will likely come into play. While key executives at the major labels and top indie executives say they fully expect to reach a deal with the music service, they say it could be a couple more months until such agreements are worked out and signed.”

Although the appeal of Soundcloud was that it doesn’t have ads or paid subscription fuckery, it’ll be different from similar sites like Spotify and YouTube in that it will be more focused on paying individual users who put out good enough stuff, which is cool.


Now, however, they’ve taken the first steps towards monetizing a lot of the music they get from various labels. After talking to different companies for who knows how long, Soundcloud cut a deal with Warner Music Group, along with two other major companies. The deal with WMG is significant, because so many artists are signed to the various labels under WMG. Roughly thousands of artists are signed to them, so this will take a big chunk out of the royalties the Soundcloud will have to pay.


The COO of WMG had some very nice things to say about Soundcloud too, saying in his announcement of the deal:

“SoundCloud is a platform built on music innovation and it has a rare ability to drive music discovery while enhancing the connection and collaboration between an artist and their following. Our deal will foster that relationship, while providing a powerful range of income opportunities for WMG’s artists and songwriters.”

Still, there remains two big stakes that they have to strike deals with: Universal and Sony. It hasn’t been easy, either, as both company’s seem unwilling to budge. According to the New York Times, Universal’s chairman said that they still needed to discuss “what the business plan is going to be." It's pretty much like saying 'we're not talking seriously with them right now' which is disappointing.


It’ll be a rough road to success for Soundcloud, but the company seems true in it’s resolve. The New York Times reports that Soundcloud’s CEO has stated that independent artists have already started receiving “decent-size checks.” Judging by the state of most Bandcamp artists, however, it’s hard to tell what’s decent sized for Soundcloud. He continued to say


“It’s not just about the major labels, it’s about other kinds of creators too, and for them it’s already functioning, and doing super well.”

If you say so Soundcloud man. There is actually quite a great deal of hope for Soundcloud artists to make a career out of it. To compare it to YouTube, who have a very similar business model for independent users, Soundcloud clocks in at a little over 17% of YouTube’s userbase every month. While this isn’t a very significant comparison, the number of people who have made careers out of YouTube are very very high, and it’s been proven by the rapid growth of Spotify that monetization of music streaming is quite easy. It's a very cool model. It's taking advantage of a lot of previously successful ideas, and making them whole.


So, lesson time, if you’re an independent artist with a good sound, don’t just stick it on Bandcamp and call it a day. Go to Soundcloud now, and be one of the first artists to start a career with them. You're more likely to get more exposure if Soundcloud is paying you to do your thing.