SoundCloud’s Life Raft Floats In Rough Waters
SoundCloud has now finalized an incredibly important licensing deal with Universal Music Group, according to details confirmed by both sides Wednesday morning. Exact details on the tie-up are still trickling in, though SoundCloud is likely paying a handsome pound-of-flesh for UMG’s blessing. That probably includes a sizable equity share for Universal, with upfront payouts also a possibility, according to top-level details not yet confirmed.
The deal leaves Sony Music Entertainment as the lone major label not licensing Soundcloud, with Sony CEO Doug Morris demanding for more tear-downs and payouts than other big label CEOs. As UMG crosses the line, earlier sources predicted that Sony would be more likely to forge an agreement as well, though that still remains a separate negotiation.
With some punishing (and somewhat speculative) details of the arrangement outlined in this article, and the real possibility that Sony will want even further concessions, there’s little likelihood that SoundCloud will resemble its present form this time next year. The service does have the advantage of a huge active listenership as it begins this transformation, but it’s safe to say the majority of those users are interested in what makes SoundCloud different and more interactive than the other digital service providers. If new stipulations force SoundCloud to homogenize towards another free tier / subscription tier streaming service then it’s anyone’s guess how they will fare.