8Sided Blog

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Apple Music and Dubset: Good News For SoundCloud?

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Billboard:

Apple has announced an agreement with Dubset Media Holdings that will allow Apple Music to stream remixes and DJ mixes that had previously been absent from licensed services due to copyright issues.

Dubset is a digital distributor that delivers content to digital music services. But unlike other digital distributors, Dubset will use a proprietary technology called MixBank to analyze a remix or long-form DJ mix file, identify recordings inside the file, and properly pay both record labels and music publishers.

Licensing remixes and DJ mixes, both based on original recordings, is incredibly complex. A single mix could have upward of 600 different rights holders. According to {Dubset} CEO Stephen White, a typical mix has 25 to 30 songs that require payments to 25 to 30 record labels and anywhere from two to ten publishers for each track. The licensing has been done in-house at Dubset. Thus far the company has agreements with over 14,000 labels and publishers.

*In many ways, Dubset is like any other distributor. The {streaming} service pays Dubset for the content. Dubset then figures out which label and publishers to pay. It retains a percentage of revenue for the service and pays the creator (the remixer or DJ) a share of revenue. *

Apple is just the start, says White. “The goal is to bring this to all 400 distributors worldwide. When you think about unlocking these millions of hours of content being created, it’s significant monetization for the industry.”

Much of the coverage I’ve seen, such as this article in FACT, assumes that Apple Music will use this alliance to go after SoundCloud. I have my doubts. For one thing, user-generated content isn’t really Apple’s bag (and adding this to the already muddled Apple Music interface would just create more headaches for casual users). My guess is that Dubset’s involvement is related to Beats One (and the inevitable Beats Two, Beats Three, etc) and making the station(s)’s sets ‘on demand’. Presently any radio sets that are on demand will have to consist of 100% pre-cleared music. I bet Apple would love to create more on demand content from the Beats station(s) without restricting their celebrity guest DJs. They would also be able to integrate featured guest DJ sets in Apple Music’s curated ‘For You’ section. Based on the timing of this announcement, I’m wondering if we might hear more at Apple’s event next week … there are rumors of a much-anticipated Apple Music overhaul.

As for SoundCloud, this news bodes well rather than being “ominous”. Apple doesn’t have an exclusive deal with Dubset, as the company openly aims to bring this technology to “all 400 distributors worldwide.” Having a huge corporation like Apple be one of the initial adopters will do a lot to convince others to come on board. What the technology accomplishes, once accepted throughout the industry, should do much to push ‘remix culture’ forward as it goes legit. And SoundCloud, who already dominate the niche of user-generated mixes and content, could end up coming out on top. Dubset’s tech, after all, seems to solve most of the problems that rightsholders have with SoundCloud’s service.

Music Can’t Last Forever, Not Even on the Internet

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Wired:

As music has become more durable, it has—paradoxically—also become more ephemeral. Your physical records don’t evaporate if the store you bought it from closes shop or the record label that published them goes out of business. If a streaming music company goes under, a stockpile of important cultural artifacts could go with it.



Fears that exactly this could happen erupted this week when a financial statements from popular audio hosting site SoundCloud surfaced online. The company, which has become a vital resource for independent musicians and podcasters, lost $44.19 million dollars in 2014 even as it increased revenue to $15.37 million, according to the regulatory document filed with the UK government. The revelation led to immediate speculation that SoundCloud could go offline, taking with it the 110 million audio tracks it hosts.



Fortunately there are alternatives to SoundCloud, such as Bandcamp, which a spokesperson told us has been profitable since 2012, and YouTube, which has become an increasingly important part of Google’s overall strategy. But SoundCloud users would have to re-upload all of their work—if they even still have copies of it. Much of what lives on SoundCloud today would likely vanish forever.



The article does point out that fears of SoundCloud capsizing are likely overblown, though it is generally agreed that 2016 is the service’s make-or-break year. But the warning is good to heed, as it should be assumed that any of these services you may be relying on could suddenly be offline – or at least altered overnight in a way that doesn’t align with your goals or ‘brand.’ My repeated advice is to future-proof yourself by focusing primarily on your own site and promotional ecosystem, treating these third party services only as complimentary outlets. The fan-outreach gateways that you fully control should always be the primary sources of attention.

SoundCloud’s Life Raft Floats In Rough Waters

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Digital Music News:

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.

SoundCloud Strikes Deal with PRS

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Variety:

Music streaming service SoundCloud has struck a licensing deal with UK-based music rights group PRS for Music, settling a lawsuit and in turn clearing an important hurdle on its way to launch a full-fledged music subscription service. Now, the company just has to get other rights holders back to the table.



SoundCloud has been working for some time on launching a paid subscription service similar to Spotify or Apple Music. However, the company also wants to keep user-generated uploads, remixes and DJ sets on its platform. To this end, it has been looking to offer rights holders the ability to monetize user-generated uploads, similar to the way YouTube has been doing it in the video space.



Music Business Worldwide:

MBW: Do you get a genuine sense from SoundCloud’s side that they have a business ambition to succeed with a subscription platform – and that they’ll remain solvent long enough to do so?



Robert Ashcroft (PRS CEO): It’s clear from our discussions with them that is their intent. I know they have good financial backing. We’re very hopeful that this will be a major service. It has its own particular personality and there’s room in the market for lots of different takes on music services. We do believe that they’re sincere in the evolution of their business.



MBW: Vevo’s looking at a subscription service, Apple Music is already one; Spotify’s conceding ground on the ‘everything free’ rule; YouTube’s even launched Red – a paid-for tier. Now SoundCloud is starting to behave itself. Is there something in the air?



Robert Ashcroft: We very much hope so. We’ve been very public about our feeling that the playing field has not been level between the different kinds of services. We’ve called on the European Commission to examine the boundaries of who can benefit from the hosting defence under safe harbour legislation and who cannot. We’ve called for a clear distinction between those services that are purely passive, like DropBox, and those that are active in that they provide search, curation and various other means of accessing music. We’re in similar discussions with YouTube. My aim is to create a climate were copyright is valued on the internet, and where all of these services can compete with each other on a level playing field.

Mixcloud’s Place In Digital Music’s Brave New World

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Cuepoint interviewed Mixcloud co-founder Nico Perez:

The thing that would set a podcast apart [from Mixcloud] is that you would actually download it to your phone. To do that legally is incredibly difficult, as you have to obtain clearances for all of the songs and clearances to download. That is something that we’ve steered away from, conducting the streaming model. Because of that, we got the licenses needed for streaming and we pay royalties to the artists listened to in the stream.



We’re slightly different in that we are a radio service and you can’t come to Mixcloud and select a song that you want to listen to and hit play, unlike the Spotifys and Soundclouds of the world. That said, a subscription service that would make sense could be of interest to us, it’s just question of working out the economics and make sure that they work for everybody. Something not too expensive, not the ten dollars you would pay per month for Spotify, because at the end of the day you’re not going to have access to 30 million songs on demand. It’s a different sort of service.


Mixcloud is party to its own legal maneuvering in providing DJ mix content, as observant US-based users may have noticed. In this country, track lists are not available until the mix has been played in full (though skipping ahead sometimes makes them visible), and mixes containing the same artist more than four times are blocked. There’s also the inability to scrub backward in a mix, and of course the ‘no download’ thing (though, of course, that applies globally). These are all restrictions in place due to royalty and licensing laws here – as regulated by SoundExchange – in an attempt to keep Mixcloud free of major label meddling and out of SoundCloud’s present hot water. I feel the Mixcloud-as-radio-station strategy is a good one, and reportedly the service aims to strengthen the radio association by adding live ‘broadcasts’. Some may balk at these restrictions, but users need to realize that total freedom of content access comes at a cost to the services (especially with regards to DJ mixes) and isn’t sustainable. Mixcloud has its flaws, but they are thinking ahead and implementing these restrictions in ways that aren’t sudden and antagonistic to its users. They’ve also worked out a way to pay out some royalty to rightsholders, keeping them at bay (for now). SoundCloud should take note.

YouTube As Well As SoundCloud Should Worry About PRS Lawsuit

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Music Ally:

We reported yesterday on PRS for Music’s decision to sue SoundCloud for copyright infringement. Over the course of the day, the key contradiction between the two parties’ statements became clear: it’s about whether SoundCloud is willing to strike a licensing deal, and specifically whether that deal would apply to both its existing free service and its upcoming subscription tier.



Meanwhile, it also became clear that this lawsuit may have strong implications for YouTube, not just SoundCloud.



In recent months, when rightsholders have complained about what they see as misuse of safe-harbour protection, they have often grouped SoundCloud and YouTube together as examples. YouTube, of course, has a licensing deal with PRS for Music last renewed in 2013.



If PRS for Music takes SoundCloud to court and wins, delivering a blow to that mooted safe-harbour defence, think how much stronger its hand will be when the time comes (as it soon will) to renegotiate its YouTube deal. Multiple sources have suggested to Music Ally that this is the real significance of the SoundCloud lawsuit. “The stakes are super high,” as one of them put it. Indeed.


2016 may turn out to be ‘The Year Of The Shake-Up’.

(previously)

We Now Return To The SoundCloud Soap Opera …

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FACT:

The Performing Rights Society for Music has taken legal action against (SoundCloud).



In an email sent out to PRS members, the body explains that “after careful consideration, and following five years of unsuccessful negotiations, we now find ourselves in a situation where we have no alternative but to commence legal proceedings against SoundCloud.”



PRS is responsible for collecting publishing royalties for musicians, for radio plays, public performances and more. Its issue with SoundCloud stems from the fact that despite having over 175m unique listeners per month, SoundCloud “continues to deny it needs a PRS for Music licence for its existing service available in the UK and Europe, meaning it is not remunerating our members.”


Now here’s a thorny situation for SoundCloud to address, especially if other PROs (BMI and ASCAP especially) choose to follow in PRS’s lead. There are rumblings that indeed these US counterparts are also considering action. I’m thinking an amicable resolution is required as part of SoundCloud’s impending alliances with the three majors (see below) but, if not, is it a realistic possibility that litigation from the publishing royalty collectors could finally bring the site down, Grooveshark-style? Do the majors, with their shiny new percentage stakes in the company and cash advances, even care?

Let’s reminisce about the early days of SoundCloud, pre-2010. It was a godsend to producers and musicians, promising a social network where they could not only post and share their own material, but also create embeddable players for their own sites. I know I was excited and, like many, ponied up the $500+ a year fee for the convenience and potentially powerful new avenue for self-promotion. I believe this was the early intention of SoundCloud: a place for audio content creators to share and promote their own material, and royalty and rights weren’t a concern. The fact that we’re uploading our own material implies compliance, and how easily we can spread our SoundCloud players was an agreeable trade-off.

Of course, SoundCloud’s growth seems to have gotten in the way of that good thing we took for granted. Remember the numerous times the site was down five years ago? Running all those audio streams isn’t cheap, and I’m figuring the powers that be saw mainstream adoption as a way to solve revenue drought. The nearly $1000 a year ‘Pro’ accounts suddenly were reduced to about $99. SoundCloud was becoming less of an exclusive club, and it seems a lot more users – and not just ‘content creators’ – came on board. (Side note: I remember, a mere few years ago, telling a friend to check out my SoundCloud account for my new music. This friend – not a musician, but probably a bigger, more obsessed music fan than me – had no idea what SoundCloud was. Never heard of it. It was an interesting realization that SoundCloud was kind of this insular club house, and this was probably the root of its woes at the time.)

As SoundCloud’s earliest adopters were electronic musicians (who, more often than not, double as DJs), DJ mixes have always been a major part of the offerings on the site. Growth meant that DJ mixes were becoming more commonplace, especially as mixes were the sole offering of many accounts (it would be interesting to know how much DJ mixes make up the total percentage of site content). The issues with these mixes weren’t completely under the radar in the early days – I received a take-down notice for a DJ mix containing a Marvin Gaye track about four or five years ago – but there certainly seemed to be a permissiveness, or at least a fingers-in-ears “nah nah nah” approach to the problem. PRS, in the article above, claims to have been speaking with SoundCloud about this for five years … probably mainly about their represented tracks included in DJ mixes.

It’s far too late, but it would be great to see SoundCloud try to pivot back to their content creator-focused days. Perhaps they can have a two-tiered system – a paid option for musicians to post and embed their own work without the hassle of advertisements, and then one for the DJ mixes and whatever else is being posted outside of the uploader’s copyright authority. I can’t imagine this happening … now that the majors are stake holders I’m not sure that they would like to see SoundCloud re-focus back towards independent and unsigned artists.

But it’s not all bad news for SoundCloud … or is it?


Digital Music News:

Universal Music Group and SoundCloud are now ‘days away’ from finalizing a momentous agreement, with sources close to the negotiations pointing to a pact potentially by the end of this week. The deal follows a massively-protracted, multi-year and cantankerous tug-of-war over licensing costs and a range of other issues, with critical financiers and a stable of lawyers hovering on the sidelines.



According to key sources with knowledge of the negotiations, the deal with Universal contains a substantial percentage stake in SoundCloud, with a significant upfront payment likely but not confirmed. That bears similarity to ongoing major label licenses with mega-streamers like Spotify, and reflects an interest in capturing an elephantine payout around a ‘liquidation event’.



“The majors are getting more interested in making money around the acquisition or IPO,” one industry lawyer told Digital Music News. “That’s more important than the huge advance but a lot of times they’re getting both.”



Indeed, we may be looking at the beginning of an entirely different SoundCloud, one that would replace billions of unpaid streams with actual payments to rights owners. Great news for artists, right?



Not exactly. Fast-forward a few months, and a fully-licensed SoundCloud is likely to replicate the problems currently dragging rival Spotify, with artists seeing tiny micro-payments while labels hoard gigantic lump sum payments. That includes proceeds from a massive acquisition or Wall Street IPO, something the largest rights owners will now enjoy as part owners.


The entire Digital Music News article is worth reading, as it goes into great detail about these sorts of deals and the aggressive maneuvering of the major labels. As a music publisher myself, I certainly know and applaud the benefit of royalties accrued from DJ mixes – especially those reaching thousands of plays – but I’m not certain that the deals that are being made will deliver for songwriters, especially independent ones. These agreements aren’t being made with the artists in mind, as evidenced by the lack of distribution of the upfront cash payouts (at least the PRS grievance is legitimately in representation of affiliated songwriters). Instead, my concern is that SoundCloud will become crippled or useless as a ‘level playing field’ promotions platform, and we’ll look back wistfully at the site’s golden days as we receive yet another tiny ‘micro-payment’ for our trouble.

Universal Music Cuts Deal With Soundcloud, Reported Equity Stake Could Hurt Artists

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Hypebot:

Soundcloud is in the final stages of a licensing deal with the Universal Music Group, sources tell MBW. The deal would reportedly give UMG a substantial stake in Soundcloud.



While details of the deal are not yet known, many in the industry question the efficacy of similar label deals with other music streamers which exchange potential revenue for artists for an equity stake for the corporation which artists often do not participate in.



That leaves Sony, the second largest player after UMG, the missing deal in Soundcloud’s monetization strategy; and given Sony forced takedowns earlier this year, a deal may not be imminent.

An Update: What The Hell Is Going On With Soundcloud?

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I really don’t mean to be posting about SoundCloud every single day, but this new article from FACT, nicely summing up the service’s recent headaches and the cause for these issues, is too good to pass up.

FACT:

Moves like this and the suspension of Dummy’s account aren’t great PR for SoundCloud. In both cases there’s no evidence to suggest they’ve done anything to warrant having their accounts shut down, and it affects the livelihood of both. Dummy, like many music sites, relies on its account to host track premieres from small artists, who in turn get the boost from Dummy’s following. If a music magazine were to lose its SoundCloud account, it could suffer a loss of traffic from a lack of premieres, and smaller artists lose a platform for exposure. But anecdotal evidence suggests this isn’t necessarily the fault of SoundCloud, but of heavy-handed requests from major labels over a licensing impasse that’s been going on for over a year.



SoundCloud has an official line on copyrighted material, but much of what goes on behind the scenes is still unknown to most people. In Dummy’s case, the trigger for its problems was material it claims had been sitting there for years. The goalposts seem to be moved on a daily basis, and nobody really has any idea why, or to what extent.



FACT asked Sony Music for comment on both their policy regarding SoundCloud account takedowns and Dummy’s allegations that it was given the tracks to host by the company itself, but Sony has yet to respond. Sony has every right to ask SoundCloud to remove illegally uploaded or remixed material, but its treatment of Dummy seems especially heavy-handed given the situation, and its silence on the matter makes it seem as if it’s happy to let SoundCloud take the blame.



The potential loss of the platform would have fairly serious implications, not just for small artists but the music industry as a whole. If the service goes the way of Grooveshark, it won’t just be underground artists like Plastician that lose their access to a wealth of undiscovered talent – it’ll be the majors losing their access to the next generation of hitmakers too.

SoundCloud’s ‘Three Strikes’ Policy Claims Another High Profile Victim

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Dummy:

Soundcloud have frozen Dummy’s account which we have grown to over 21,000 followers having used and supported the service since it first launched. Although the page is still visible, we can no longer access to repost or upload tracks.



The reason Soundcloud has given is that we have received three strikes for content that we have uploaded which is in breach of major record company Sony’s copyright, although Soundcloud have so far not told us which tracks are in question.



Soundcloud have stated if we can persuade Sony to remove the objections then they will remove the strikes to restore and unlock our account. However, under instruction from Sony, Soundcloud are not allowed to tell us who to contact within the organisation. We have only ever uploaded music that Sony have sent us to promote, so it seems ridiculous that they would want to shut down our account and prevent us from supporting new music signed to their label in the future.


This is an update to yesterday’s post, and more evidence that the pressure on SoundCloud is getting to deep sea levels. Not that I’m advocating favored exceptions to SC’s policy, but it hardly seems like a good idea to target a respected and somewhat influential music site like Dummy. And obviously Sony isn’t the one getting tarnished in the eyes of the public. Perhaps SoundCloud should be more transparent in their take-down notices as to why certain content is not permitted, spinning it as more of a case of boycotting content from those who won’t play nice at the bargaining table. All of this backwards-bending and high stakes negotiating won’t mean anything if SoundCloud emerges with a MySpace-like public indifference.