SoundCloud has agreed a multi-territory with U.K. collecting society PRS for Music, ending a suit brought against the Berlin-based startup this past August.
The license covers the use of PRS for Music repertoire since SoundCloud’s 2008 launch, and paves the way for the streaming service to launch its subscription and advertising services across Europe in 2016. Terms of the deal were not disclosed, with both parties refusing to discuss specifics — including the matter of historic back payments for rights holders’ — when contacted by Billboard.
PRS began litigation against SoundCloud earlier in the year for repeatedly failing to remunerate its members and for a continuing denial that “it needs a PRS for Music license” for its streaming service in the United Kingdom and Europe. At the time, PRS said “following five years of unsuccessful negotiations, we now find ourselves in a situation where we have no alternative but to commence legal proceedings.”
That course of action has now been resolved, with Alexander Lung, founder and CEO of SoundCloud, hailing today’s deal as an “agreement that will expand revenue opportunities, improve the accuracy of royalty distributions, and launch new services for our 175 million monthly active listeners.”
“It’s significant in that it moves us forward in our quest to attain a level playing field for all of the licensed online services,” PRS for Music’s chief executive Robert Ashcroft tells Billboard. He calls the deal “a pointer on the road to clarifying the situation for other distributors of music.”
“In the long term, everybody benefits. In the short term, this brings the creators more into the frame because they have been left aside. We can’t continue to operate in a world where creators see no value for his or her work,” states Ashcroft. He adds that PRS will continue to lobby the European Commission for greater clarity and more stringent legislation regarding ‘safe harbour’ provisions that content providers such as YouTube use to avoid paying proper license fees.
“This is a huge step forward in ensuring unlicensed music services understand they cannot get away with not paying for music anymore and that they cannot hide behind safe harbour legislation that was never meant to protect them in the first place,” says Vick Bain, CEO at The British Academy of Songwriters, Composers and Authors (BASCA).
Commenting on the deal, SoundCloud’s svp business development and strategy, Stephen Bryant tells Billboard that past disagreements between the streaming services and PRS for Music “have been put aside and the two companies are working together and really focused on the future and the type of businesses that we can build together.”
“Over the last couple of years we’ve been really focused on generating revenue opportunities for the creative community and this deal enables SoundCloud to continue to operate as a platform that really been built for creators at all stages of their career. Whether they are signed to a major label or an indie artist, this deal enables that creative community to continue to use the platform and make sure that creators and artists and songwriters are properly compensated.”
Bryant says that, as a result, SoundCloud will roll out both its advertising-supported ‘On SoundCloud’ monetization program and subscription model in Europe in 2016, although declined to discuss exact time frames.
“SoundCloud is an incredibly unique, differentiated platform and there really isn’t a service like ours,” he tells Billboard. “There isn’t an off-the-shelf license that could be applied to a service like ours. So a lot of the effort that we have gone through has been to work with the industry to develop a model that’s appropriate for [SoundCloud].”
“We’re going to continue to work to put the other deals in place that will need to be able to turn on monetization in as many places as possible,” says Bryant, who calls the PRS license deal an “important enabling step towards achieving those monetization goals”.
Nevertheless, despite its best efforts, Warner Music remains the only major to sign a formal licensing deal with the streaming service. Earlier this year, Sony Music removed all its catalog from the platform following a breakdown in licensing negotiations and while a deal with Universal Music was said to be near this summer it appears to have stalled with reports linking PRS’ legal action against SoundCloud as a contributing factor.