WMG Signs Licensing Deal With SoundCloud, Will Get 5% of the Company

SoundCloud’s losses are rising, and the major labels have showed up on their doorstep demanding a paycheck. It’s been obvious that the music-hosting service needs to do some serious re-thinking.

Last month news spread that SoundCloud’s negotiations with the major labels had crumbled, and Universal reportedly pulled out of the negotiations altogether.

Negotiations with Warner apparently continued, and Warner Music Group and SoundCloud have now signed a licensing deal.

WMG artists, artists on WMG sub-labels, and songwriters represented by Warner/Chappell will get paid when their music is played on SoundCloud. The deal also cover plays on tracks included in mixes and mashups.

According to a New York Times anonymous source, WMG is also going to pay for a three to five percent stake in SoundCloud.Robert Wiesenthal, WMG’s COO, says:

“SoundCloud is a platform built on music innovation and it has a rare ability to drive music discovery while enhancing the connection and collaboration between an artist and their following… Our deal will foster that relationship, while providing a powerful range of income opportunities for WMG’s artists and songwriters.”

SoundCloud also recently added a feature that allows artists with large fan-bases to place ads on their tracks. This paves the way for a future ad-free subscription service, which is a requirement in the WMG deal. This will come in the first half of next year.

SoundCloud CEO Alex Ljung told Businessweek that any future deals will leave room for non-monetized ad-free tracks, a crucial part of SoundCloud’s user base. Major labels don’t need to use SoundCloud in their promotional and marketing efforts, but it’s an indispensable service for indie artists and publicists.


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

2 Responses

  1. Remi Swierczek

    Confused labels boys just plant the seeds not knowing why and where and hoping for money to come from some place.

    Potentially they are also diminishing the value of music by licensing NERDS with no regard to conventional money making.

    • Willis

      This is nothing new. They did it over a decade ago with MP3.com, also.