SoundCloud Nets First Deal with a Major Label

Soundcloud
 Ole Spata/picture-alliance/dpa/AP Images

The Soundcloud app runs on an iPad in Berlin, Germany, 17 March 2014.

Warner Music Group signs on the dotted line with the music service with the most listeners.

SoundCloud has confirmed its first deal with a major music company.

The company, which brings 175 million listeners into its orange ecosystem per month, has tied the knot with Warner Music Group and its publishing company Warner/Chappell, bringing the pair to its (still invite-only) On SoundCloud monetization initiative. On SoundCloud, the company's first attempt to generate for creators (and itself), lets content partners decide what of their uploaded content to monetize, via five different advertisement flavors (native, audio, display, channel sponsorship and contests).

On the phone from New York, SoundCloud CEO Alex Ljung tells Billboard that, while the announcement came "a bit earlier than we expected" (after the Wall Street Journal published a detailed report about the deal, citing unnamed sources), the deal won't make SoundCloud into a Spotify-type on-demand streaming service. "It's a natural evolution," Ljung says.

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"They don't have a commitment to put up their entire catalog," Ljung tells Billboard. "What it will mean for listeners is that they will be getting a lot more content from Warner artists. We keep the flexibility that's been part of SoundCloud for a long time. It's much more in their control -- this allows them to enable monetization of content they already have on the platform. And now there's more incentive for Warner to put up [more] content."

Ljung promised that the deal puts SoundCloud and its content partners on "a path to a much higher degree of monetization."

As far as what the company's forthcoming subscription service, confirmed in a statement to be set for launch in early 2015, will look like, Ljung refused to give details, except to say that it would be part of On Soundcloud. As far as a reported piece of equity for Warner in signing the deal, said to be a 3 to 5 percent piece of SoundCloud, Ljung wouldn't comment on any details specific to the contract.

Asked about DJs' and producers' mixes, a popular attraction for the company's website, and "micro-monetization" within those mixes, Ljung demurred, saying he'd like to see monetization available "to every creator."

"This deal will enable SoundCloud to further develop its product as well as its massive user base, and will deliver multi-tiered monetization while preserving the elements that have made the service so popular. It’s a win for artists, for rights-holders and for consumers," said Jonathan Dworkin, evp, digital strategy and business development for WMG, in a statement.

Ljung refused to comment on whether deals, similar to the one with WMG, with the other two major labels and reigning publishing houses might appease NMPA chief David Israelite -- who told Billboard late last month that "We may still look to sue them, but we're in a conversation."

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