Major Labels Reportedly Negotiating an Equity Deal With SoundCloud…

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SoundCloud is currently working on a way to pay their top artists, and apparently these aren’t the only people getting a check. It looks like the major labels could get a considerable payout from SoundCloud in the future.

Why would Sony, Warner, and Universal protect their artists’ songs from unauthorized use, when they could get a piece of the pie instead? A piece of the pie that they wouldn’t have to share with these artists.

Bloomberg reports that the labels are approaching deals with SoundCloud, according to sources that asked to remain unidentified.

The labels would agree not to sue SoundCloud for copyright violation in exchange for a 3 to 5 percent stake in the company each. SoundCloud would also give the labels a percentage of future revenue.

This is similar to agreements the labels have made with Spotify and Beats Music, securing equity as part of licensing agreements.

Two sources said these agreements would value SoundCloud between $500 million and $600 million.


Nina Ulloa covers breaking news, tech, and more. Follow her on Twitter: @nine_u

8 Responses

  1. Jimmy O

    Soundcloud will never be a big enough player to matter.

    • Frank

      I disagree — paid downloads are declining yet paid stream svcs aren’t reaching a tipping point precisely because of the free alternatives of YT and SC. Then there’s the fact that the entire EDM generation listens to their fav DJ/producers on SC.

  2. Versus

    This can’t be allowed to fly. This would legalize the until now illegal process of monetizing piracy.
    The label would make money, the tech company would make money, but the actual content providers would receive nothing.

    • Mojo Bone

      SoundCloud is subscriber-based and sells no advertisements, so how can that be construed as monetizing piracy? Where major labels have contracts with the artists featured on SoundCloud, it’s their responsibility to remit royalties earned, according to the stipulations of the artists’ contracts. Further, SC’s user agreement forbids uploading content the user doesn’t own, though I doubt all users are in compliance. If anything, SC is the only player in the streaming space that’s abiding by the rules.

  3. Versus

    ” SC’s user agreement forbids uploading content the user doesn’t own, though I doubt all users are in compliance.”

    That doubt is justified. There is an immense amount of intellectual property infringement on SoundCloud.

    The point is that with this agreement, that amount would become much greater, since the labels agree not to sue. The labels would get “paid” for looking the other way, but apparently the artists, writers, publishers, etc. would get nothing.

  4. Willis

    I’m a billionaire when it comes to dot com equity. Zzzz


    SoundCloud is a big name of music industry. This is the best place to advertise music.

  6. Littlefish

    Don’t all these new exciting music tech companies brand themselves as the ethical, legal alternative to music piracy? Basically all the majors get kickbacks so they don’t sue.

    The artist loses out yet again, to yet another middleman. What’s worse is these companies claim to be the legal and ethical alternative and this just isn’t the case.