Digital announces label deals

By | Published on Wednesday 14 March 2012

As expected, yesterday announced some label deals at South By Southwest – in fact, deals with all four of the majors, which, the streaming-and-sharing platform’s founder said, had been a lot easier to negotiate than he was expecting.

Founder Billy Chasen admitted to Billboard yesterday that he and his team had little knowledge of the music industry when they launched their service last year. After causing a little buzz in various parts of the world when the service first went live, users outside the US were subsequently locked out as chiefs began the tricky task of licensing their service after the fact.

Deals were quickly done on the publishing rights side with the two main American collecting societies, ASCAP and then BMI, but there was still the trickier matter of getting licences from the record companies. Initial indications suggested that the company thought it would be able to licence those rights via SoundExchange, the royalties body that represents the American labels in those few areas of digital where blanket licences are available (such as Pandora’s interactive radio service), but others questioned whether the blanket licence would apply.

And by September it was rumoured that talks were under way directly with the majors, possibly facilitated by two useful investors, Lady Gaga manager Troy Carter and Madonna’s long term business partner Guy Oseary. Last week it emerged an EMI deal had been done and that Sony and Universal deals were nearly completed, and yesterday Chasen announced all three were now on board, as were Warner Music, often the hold outs on new digital services these days.

Chasen told Billboard: “This feels like an all-time record speed launch. When we launched we really didn’t come at this from the music industry, it was all new to us. [And] our model is unique – we’re not a radio service, not an on-demand service. We have interesting aspects that really require some out-of-the-box thinking. We felt that from the get-go the labels were absolutely different from what I’d been led to believe. They gave us a lot of time and attention. Compared to their user base, we’re a tiny service in the broad scheme of things”.

Obviously the exact details of the deals done with the majors are not known, and some are speculating whether the big rights owners have made demands that will hinder’s growth long term. Though word has it label execs reckon this digital model – where users play music to friends and strangers via a virtual room – has much more potential as a promotional platform for showcasing new artists than many other streaming-based set ups, and is also different enough that it doesn’t directly threaten revenue from existing digital services, hence their willingness to play ball.