SoundCloud Signs Deal with Holdout Major Sony Music
Update, 3/18/16, 4:32 p.m.: In a statement, SoundCloud and Sony have confirmed the signing of a deal. "We are very excited to be working with SME," SoundCloud CEO Alexander Ljung writes in a statement, "and cannot wait to see what we can achieve together as we continue to transform the future of music online.”
SoundCloud has struck a deal with Sony Music, marking the last cobble on its road to full legitimacy and the launch of a paid subscription service, according to a report from The Verge this evening (Mar. 17). SoundCloud tells Billboard they won't comment on rumors, while Sony Music did not immediately respond to a request for confirmation.
Sony and SoundCloud have had an acrimonious year, with the label pulling and keeping its music off the service as SoundCloud struck deal after deal with major (and major) and indie alike. Onlookers can expect the company to move ahead quickly with plans that were likely dependent on securing Sony's signature on a contract that may include equity in the elegant streaming platform.
It will have stiff competition once it leaves the safe space of free streaming hosting -- earlier this week, Billboard broke the news that Apple Music would be licensing and streaming "derivative works," most easily explained as DJ mixes and remixes. Playing host to this type of music is what SoundCloud does best, and the complex technological processes involved in fractional licensing -- as in, "10 percent of the song belongs to x, and 80 to y, and both would like to be paid please and thank you" -- is something it has been exploring feverishly. These works form the spine of what Universal Music Group CEO Lucian Grainge called the “exciting new forms of music community engagement on SoundCloud" at the time his company struck a deal with the Berlin-based startup.
That work doesn't come cheap -- last month, financial documents revealed that SoundCloud had spent $63.8 million in 2014 and generated just $19.7 million in revenue. It's worth noting that this was in the early days of On SoundCloud, it's advertising-driven money-making strategy. But after many years of funding the company will be expected to monetize its shiny new holistic legitimacy sooner rather than later.