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[Updated] Soundcloud Reportedly Inks Landmark Licensing Deal With Universal Music Group

Update 8/25/15: Digital Music News reports that Soundcloud and Universal Music group are now “days away” from a monumental deal that “contains a substantial percentage stake in SoundCloud, with a significant upfront payment likely but not confirmed.” This has reignited the debate surround Soundcloud, Sony’s objection to the service, and whether the major labels truly care about preserving the idealism upon which the service was created.

If there’s one idea that’s been uttered over and over and over again in EDM lately, it’s “Soundcloud hates artists.” THUMP called Sony’s massive take down last week “The Great SoundCloud Purge of 2015,” and YourEDM claims “The SoundCloud Apocalypse Is Upon Us.” Whatever your feelings about the service, it is clear the picture in our minds of a free music wonderland is coming to an end.

Today the picture would appear to be even more grim as sources are reporting Soundcloud is in the final stages of penning a licensing agreement with Universal Music Group (UMG). This would be the third deal Soundcloud has signed with labels (Warner Music Group and Merlin have already signed on), deals that all stipulate the inclusion of a paid subscription tier to its free service.

Sources near the stories claim that “initially, Universal’s demands were completely unacceptable to Soundcloud. But the power has shifted since those days.” The suggestion appears to be that, with Sony splashing around the currently-in-the-red Soundcloud, its investors are ready to make sacrifices for major label deals.

sony madeon soundcloud tweet

It’s worth noting here that Sony Music is within its rights to remove content from Soundcloud. Almost 100% of the time artists sign over exclusive rights of the recordings of their songs to their label. This means that anyone posting the recording online without permission, even the performing artist, is breaking the law. Soundcloud is merely performing its duties under the DMCA to ensure it is not legally liable for infringement happening on its service.

“Universal had a couple of aggressive choices: they could either sue SoundCloud, which wasn’t off the table, or refuse to play ball with them and watch them slide out of existence as money ran low. But Universal knows that a world with a SoundCloud that it can control is better than a world without SoundCloud full stop – especially if that leads to a hundred clones popping up online.” – Music Business Worldwide Source

Nevertheless, furor over Soundcloud making any revenue has reached a fever pitch. THUMP once again characterizes it as “Soundcloud vs. The World in the War for your Ears and Wallets.” It’s understandable that artists are furious over not having rights over their own music. The thing to remember is this is in no way Soundcloud’s responsibility. Artists sign their own agreements with labels. Labels have every right under the DMCA to have their property removed from services that use without paying. And Soundcloud is caught directly in the middle.

Should this deal go through, it all but guarantees a paid version of Soundcloud (more in-depth than the On Soundcloud offering) will follow shortly behind. At that point Soundcloud will be operating in almost-full view of the law, and DJs and EDM fans will have to decide to either pay up, or retreat back to the shadows of Pirate Bay or 1001tracks.

(h/t Music Business Worldwide)


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Audio engineer, music business expert, Wordpress developer, writer, musician, friend. Published in Forbes, Hypebot, and Inc. I'm the Owner and Co-Founder of Dance Music Northwest!

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Important things happen in Pacific Northwest nightlife, and DMNW will send you alerts!

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Important things happen in Pacific Northwest nightlife, and DMNW will send you alerts!