SoundCloud Reaches Licensing Deal With PRS

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Under the threat of massive litigation, SoundCloud has now inked a multi-month agreement with PRS for Music.  PRS is a UK-based licensing agency, whose membership spans songwriters, composers and music publishers.  The multi-territorial deal will last for a few months, according to details confirmed by PRS representatives this morning.

It will also put legal proceedings on ice, though there’s always that dangling threat.  “On behalf of our members, I am pleased that we have been able to reach a settlement with SoundCloud without extended legal proceedings,” noted Robert Ashcroft, Chief Executive of PRS.   “This ends over five years of discussions on the licensing requirements for the platform, resulting in a license under which our members are fairly rewarded for the use of their music.”

PRS first announced legal action against SoundCloud back in August, a move that followed years of fruitless talks.  The lawsuit came at a most inopportune time, with SoundCloud CEO Alejxander Ljung putting the finishing touches on massive deal with Universal Music Group. According to insiders, that deal was indefinitely delayed following the PRS lawsuit, partly because UMG wanted to show demonstrate solidarity with rights owners.

Soundcloud = 175 million active listeners…

But Universal was also worried about liability themselves: after all, licensing content to a company facing serious litigation could implicate UMG, with guns pointing in every direction.  That’s unfortunately familiar to a hyper-litigious music industry, but not the best for revenue.

Meanwhile, SoundCloud still has about 98 problems, including licensing impasses with megaliths like Sony Music Entertainment.  Sony has been willing to take UMG’s lead to an extent, but has also been most active in ripping down content from SoundCloud.

 

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Caught in the barbs are pissed-off artists, with many grumpy about losing an important fan outlet.  “The one thing I am kind of bummed about, is like recently all the major labels – and we distribute through majors because we — they all took — made it so all the full songs on SoundCloud are being taken down and limited to clips, and shorter previews,” Skrillex told Charlie Rose ahead of the PRS suit.  “And there’s kids that only go on SoundCloud and will never buy at iTunes and even never go to Spotify, and that’s how they listen to music.  And what that does is it eliminates a huge asset and is cutting off our music to an audience that could potentially come to our shows and be fans.”

Site teardowns and content removals are commonplace on SoundCloud, yet the broader traffic impact seems to be muted.  In, fact, recent data shows traffic actually increasing.  In comments this morning, Ljung pointed to 175 million active listeners, a number that everyone would prefer to license.

 

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