SoundCloud's Prickly Position: Under Fire from Sony and Still In Talks With Universal

These days, SoundCloud is stuck between a rock and a hard place.

The rock in question: Universal Music Group, a label with a back catalog and current roster so vast and essential that their absence from a digital music service, especially one as unique and in as challenging a position as SoundCloud, makes that service's continued operation almost impossibly challenged.

Why is SoundCloud's position unique and challenging? For the same reason it is fraught with problems: the DJ sets, remixes and mashups that form the core of its appeal.

And what about the hard place? That would be Sony Music Entertainment which, like Universal, continues to hold talks with the audio platform, which hopes to sign those two majors to its On SoundCloud monetization program. (It has secured deals with indie label body Merlin and Warner Music Group, a major with few hangups with technological experimentation.)

Unlike Universal, however, Sony has taken a more hardline approach with the company, removing all of its music from the service while talks continue. Sony artist Madeon criticized his label for removing his work from the platform in late May.

(Neither Sony, Universal or SoundCloud would comment on any continuing negotiations. However, despite a report earlier today claiming Universal and SoundCloud had come to an agreement, a source familiar with the talks tells Billboard that negotiations are ongoing.)

That aggressive negotiating posture ended up causing the SoundCloud accounts of two respected British music publications, Dummy and DIY, to be suspended due to copyright claims against Sony songs they had uploaded to SoundCloud. "If we're told that any content has been posted without permission, we need to remove that content in accordance with applicable law," said SoundCloud in a response to the situation.

It may appear that Universal likes SoundCloud and Sony doesn't, but reductive conclusions like that rarely approach reality. Just because one label is being more aggressive doesn't mean they don't want SoundCloud to succeed. At this point, every label has a good reason to want SoundCloud to thrive; its technology is robust, its users love it and use it a lot, it has implemented copyright protocols and it is further down the road of figuring out monetization than similar platforms like Mixcloud.

On the internet, however, nobody is married to a preferred URL. If creators see Dummy and DIY struggling with SoundCloud, they make take it as a sign to move to rougher pastures, with the corresponding overgrowth, that give them exactly what they want. Whither Myspace?

What does this all mean for SoundCloud? They will give Sony and Universal points of equity, and they will tackle the problem of how to embrace derivative works.

Or they won't.