SoundCloud has had trouble with its transition from a small, music discovery platform to a billion dollar company that has played a vital role in artist development, but also found itself in the crosshairs of industry executives who want all aspects of the platforms to play exactly by the rules. It has sought licensing deals with the three major labels, Warner, Sony and Universal, but has struggled to get obtain. Warner was the first domino to fall and now in a big move for SoundCloud, it has just announced a licensing deal with the biggest label on the planet, Universal Music Group.
Among the artists it will now have access to include 5 Seconds of Summer, Adele, Kanye West, Coldplay, Taylor Swift, Avicii, Lil Wayne, Metallica, Sam Smith, The Weeknd, Lorde and Prince.
SoundCloud founder and CEO Alexander Ljung says, "With this partnership with UMG we will further strengthen and grow the unique community we've built over the past seven years, where multiple forms of expression can live and where artists at every stage of their careers come to create and share their work."
The deal now means that Sony Music and Sony/ATV are the only majors to not sign on with the platform. It has also signed deals with thousands of independent labels and publishers, but it has been the majors that have caused the most problems for users. This hopefully will alleviate those concerns and open up a new library for exploitation on SoundCloud.
Universal Music Group chairman and CEO Lucian Grainge says in a statement, "At UMG, we have long embraced empowering entrepreneurs and innovative services such as SoundCloud. With this partnership, we're ensuring recording artists, songwriters and labels benefit, both creatively and commercially, from the exciting new forms of music community engagement on SoundCloud. We look forward to working with SoundCloud and supporting the company's evolution into a successful commercial service."
SoundCloud is still struggling to create a viable business model that generates revenue for the company and pays out royalties for users. Last May, after introducing ads nearly a year earlier for select users, it said it had paid out only $2 million in royalties. This deal will probably accelerate the timetable for SoundCloud's rumored paid subscription service, which is expected at some point this year.
