Soundcloud To Have Ads and Royalty Collection with Subscription Service

The day has finally come for SoundCloud to legitimize itself, and put it’s days of free content and unrestricted uploads in the past.  This excerpt from The New York Times is an explanation of the strategical pivot:

“In many ways the move is a reaction to industry pressure to license content and produce revenue. It also reflects SoundCloud’s complex relationship with record labels, which use the service to promote new releases and even hunt for new talent but have been irritated by their inability to make money from SoundCloud’s millions of listeners.”

What does this mean for the content creators, and more explicitly, DJs?  Well, part of the licensing deal struck with entertainment companies to host advertisements on the site was in order to provide revenue for the labels and artists whose content will now be monetized.

“For its new program, Premier, SoundCloud will sign licensing agreements with music companies that will allow it to run advertising on its service. Most of the revenue from those ads will go to the content provider, said Jeff Toig, SoundCloud’s chief business officer, although he declined to be more specific.”

SoundCloud has negotiated with these major and independent labels over equity stakes in the company in exchange to not be sued for past copyright violations.

“The first advertisers include Red Bull, Jaguar and Comedy Central, whose ads will run only in conjunction with licensed content. Among the initial content partners are two major music publishers, Sony/ATV and BMG; the distributors INgrooves and Seed; the comedy site Funny or Die; and a number of independent artists, including the Washington rapper GoldLink.”

That means if the record labels have the power to enforce their copyright restrictions on unlicensed content, it does not bode well for those artists that continue to upload bootlegs, unofficial remixes, and mixes.  So, what started as SoundCloud’s appeal to up and coming producers and djs will force music discoverers to look for these artists elsewhere.

Fans that are used to ad-free listening and creators that are used to unrestricted content are going to need to either adapt or pay for it.

What do you think? Is SoundCloud’s defensive move a giving into the system, or is it a step in the direction of where the music industry should be headed?

Read the full article by The New York Times here!

Read more about where the argument originated here!


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