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SoundCloud label talks faltering, says FT

By | Published on Friday 10 October 2014


SoundCloud’s latest bid to become a licensed music service is faltering, according to the Financial Times, because of those pesky major record companies and their lust for loot (aka desire to be paid for their content).

As previously reported, while the core business of SoundCloud has traditionally been upselling premium accounts to content owners, who in return get great streaming technology though no way to monetise their output, the digital firm has more recently been ploughing ahead with developing an advertising element to its platform, presumably as investors push for higher revenues.

Part of that strategy is the plan to secure licensing deals with the record companies, presumably so that labels would start uploading new releases as a matter of course, earning a cut of ad revenue as they do so. Many artists and record companies already use SoundCloud as a content distribution platform, but the lack of monetisation tools has long been an issue for rights owners.

Plenty of people in the labels are pleased that SoundCloud is now piloting its ads system, the platform being popular amongst both record industry staffers and artists. And with the service boasting 175 million listeners a month worldwide, there is desire inside the record companies to find a way to make a monetised SoundCloud work.

But at the same time, the labels are currently very wary of any new licensing proposal that could hinder the growth of those operating on a Spotify model, which is currently fuelling the boom in streaming income for the content owners. And to that end the labels are reportedly playing the “you need us more than we need you” bluff and holding out for better rates, even though SoundCloud was rumoured to be offering equity to sweeten the deal.

With hindsight SoundCloud should have got to the negotiating table much sooner, because before Spotify started to boom in Europe the Berlin-based start-up would probably have found the labels in a slightly more flexible mood. It doesn’t help that SoundCloud’s model seems to be more like that of YouTube than Spotify et al, and the YouTube model has been the subject of much criticism by labels and artists alike in the last year.

At one point it seemed that SoundCloud’s main priority was getting bought by a bigger player – making these late-in-the-day label talks some other sucker’s problem – but takeover talks, including the mooted conversations with Twitter, didn’t come to anything.

The FT says that, despite reports over the summer months that label talks were going well and deals were looking likely, there remain hurdles to cross, the main hurdle being how much SoundCloud will pay. The paper also claims that talks with the biggest record company of them all, Universal, have now wound up for the time being.

In more joyful news coming out of SoundCloud HQ, the firm has been rolling out a new look to its web platform this last week which steps up the visual element, making a SoundCloud content page look rather like a YouTube content page (look at all that extra space for ads!!!!).

“Visuals are a crucial component of how you choose to share your music and audio” the company said in a blog post earlier this week, “and now they’ll be backing every track on the web as they do on our iOS and Android apps and embedded players”.

It does look nice, though any of you with legacy content where you uploading little pictures to go with your audio, you might want to swap the pics, cos there’s a high chance they currently look shit.