SoundCloud cuts licensing deals as as Sony pulls major artists

You start with a good idea and the monetisation of that idea comes later. That’s kind of how effective and successful media works – it’s true of (viral) videos and it’s true of music. But the waters of online streaming are difficult to navigate for both listeners/viewers and the people who own the rights to the content. YouTube is a prime example of a platform founded on share-ability and interaction without considering the monetisation, or indeed the licensing, of the material uploaded to their service until much later.

Streaming service SoundCloud is at a cross roads not all that dissimilar to the one YouTube found itself in over music licensing battles. As labels try to have fans make the shift from the free (for now) streaming service onto other models like Spotify, SoundCloud is inking deals and rolling out in-service advertising in certain markets in order to see greater revenue and ultimately keep artists uploading, sharing from and driving users to the platform.

Since the initial introduction of these revenue building avenues mid-2014, SoundCloud has already paid out upwards of $2 million to artists and labels. This week, the Berlin-headquartered streaming service also signed a Rights Agreement with American music publishing trade organisation NMPA (National Music Publishers’ Association) to pay artists and music publishers royalties, presumably on a per-ad basis rather than the per-stream model used by Spotify. The agreement, as explained by NMPA CEO David Israelite, ensures that when SoundCloud is financially successful, “the songwriters whose content draws so many users to their site” will be as well. Fair enough. 

Having often been hailed as a haven for upturning un-heard of gems, SoundCloud has been instrumental in the “discovery” of artists like Lorde and Leon Bridges, who have gone on to ink deals with major labels. It has also been embraced by well-established artists like Beyonce and Drake as a way to share new content with their fan communities.

Still, despite pay-outs, future plans for monetisation schemes and the priceless ease of both discovery and share-ability, Billboard has reported that Sony Music has gone ahead with a decision to pull all original content from a number of its artists’ SoundCloud profiles.

AdeleMiguelPassion PitMS MRHozierKelly Clarkson and Leon Bridges have all had their original content removed from the streaming service by Sony Music. While the label have yet to comment, reasons are presumed to be due to a “breakdown in communication” between Sony and SoundCloud, which is no doubt connected to licensing and a perceived lack of opportunities for monetisation despite the Rights Agreement and deals with other labels, both major and independent.

While it would be easy to boil Sony’s decision down to some kind of dollar-thirst on the label’s behalf, the fact remains that musicians (and to an extent, other rights holders) still see little revenue from their output. Payment of royalties on a per-stream basis like Spotify’s, along with its subscription fee and advertising options, are considered more desirable, with labels attempting to drive fan bases from (or cheaper) platforms to these paid ones. But even the biggest streaming service in the world still struggles to win some over artists, with big commercial hitters like Taylor Swift speaking out against (and removing content from) the service – and competitors are catching on. Jay-Z’s TIDAL, while still incredibly fresh, boasts an “all for the artist” ethos, alongside royalty payments that almost doubled those of Spotify in March this year.

As an unnamed artist manager commented to Billboard, SoundCloud has been “a good place for exposure… But at the same time, artists and labels need to get paid for music.” It seems that until a better balance between service, product, creator, owner and perhaps most importantly, the consumer, can be found, impasses like Sony v SoundCloud are going to continue to occur.