Exclusive: Soundcloud Bracing for Massive Copyright Infringement Lawsuits…

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Grooveshark said it wouldn’t happen to them, either.  But according to multiple executives close to the situation, Universal Music Group, Sony Music Entertainment, and the Recording Industry Association of America (RIAA) will soon be filing lawsuits against SoundCloud for ‘massive copyright infringement’.

The move comes ahead of an anticipated premium subscription launch… or not.  “They don’t like SoundCloud’s attitude, they don’t like the pace of the talks,” one source flatly told DMN, with particular reference to SoundCloud’s CEO, Alexander Ljung.

“I’m not saying this is another ‘legal jihad,’ but lawsuits will be filed.”

And what is SoundCloud’s ‘tude, exactly?  One issue is Ljung’s insistence on maintaining a free tier, similar to the ‘freemium funnel’ created by Spotify.  “There are 3 billion people online, you’re never going to all get those into subscription, it’s just not going happen,” Ljung flatly stated recently at Midem.  “Some people will come through ads, some through subscription.”

“That’s why I’m choosing to have both.”

But from the standpoint of mega-labels like UMG, that’s not necessarily his choice to make.   And neither are the terms of their contracts.

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Meanwhile, uploading DJs are finding their content blocked based on stepped-up copyright claims from companies like Sony, a situation that spells more than inconvenience.  “The DJs are getting strikes for infringement, and that’s affecting their accounts,” one source noted.  “They’re trying to avoid that and thinking about other places to upload.”

At this point, it’s unclear where indie labels, including consortia A2IM and Merlin, will land in the matter.

The news comes just as indie label consortium Merlin has inked a significant deal with SoundCloud, a pact the ushers in potentially 20,000 label participants.  “I’m excited to announce our largest independent label partnership to date with Merlin, the global rights agency for the independent label sector,” Ljung said.

Sounds positive, though it’s not clear that Merlin signed a solid deal.  After all, this is the same consortium that signed a deal with Grooveshark, essentially validating the company right to the bitter end.

But wait: isn’t SoundCloud already signing major label deals?  Well, they have signed one deal with Warner Music Group, but that deal is already being written off as a “special case one-off” scenario driven by SoundCloud SVP of Business Development and Strategy Stephen Bryan, who recently worked at Warner Music Group.  That deal handed WMG a 5 percent share, which apparently just isn’t good enough.


Pictured at top: Sony Music Entertainment CEO Doug Morris.  Written while listening to Claptone, Mark Knight, and Mord Fustang.

38 Responses

  1. Izzy84

    A 5% share is or isn’t good enough if WMG says so. 99% could be not good enough. WMG ought to be dictating terms considering Soundcloud is making money off of unlicensed material. This isn’t about fairness to people who built a business based on giving other people’s work away for free. They probably should have considered the illegal aspects of their business model before they built it.

    • blobfish

      Why would you support these bullies, all they’re doing is using coercion to filter competition, you build a business (business of creating music and signing artists onto your group etc), and technology moves on in a way that has significantly changed your ways of income, instead of adapting (which some labels do well, in fact, some labels realise you can’t make money for sales of music directly any more), they threaten to shut them down with their stable of lawyers, yeah sure, they’ll win, but do we then sit around and pretend people can’t get their music for free because Soundcloud is now dead? Soundcloud isn’t founded by kim dotcom, they don’t exist for others to upload copyrighted music, I for one only use it for “bedroom producers”, whose music I would never have come across if it weren’t for Soundcloud.

    • gBeaTz

      If you knew anything about Soundcloud, you would know it started as a forum for independent artists and dj’s to upload, promote and share their own music. This enabled these startups to get the word out and reach an audience they otherwise would not be able to. Since EDM has grown in popularity, so have the dj’s and thus the record labels now want to cash in on this popularity. It has nothing to do with an illegal business model, more to do with the excessive greed of the big labels, which shouldn’t be a surprise to anyone.

    • King Shlomo

      You are clearly a misguided tool. WMG should have paid their artists proper royalties instead of using corrupt accounting practices. Yes WMG should get compensated but they’re not the end all be all. If every business thought about every single legal issue, no businesses would launch.

      why? cause in america you can sue for anything. fuck lawyers, maybe you are one. maybe you work at WMG. either way they don’t care about you. stop being a tool. support tech companies that enhance the listening experience and provide additional revenue streams for music creators.

      • Alvius Firn

        Staggering to see the apparent rather brazen support for piracy on Soundcloud. Which based on your comments and some others here in response to Izzy4’s goes something akin to the below…

        Soundcloud starts good intentions.
        Helps musicians get their music heard. Hooray.
        DJs and others start using Soundcloud to upload copyrighted material (rights they don’t own).
        This is OK. Apparently.
        Labels & owners of said infringed material challenge this breach.
        They are evil.

        Labels have a right to challenge copyright infringements, nay a duty. And I suspect those with a deal with a major would want them to on their behalf also.

        ps though not everyone wants to hear DJ mixes, I have sympathy for Matt, who has done everything the right way (permissions granted) and is seemingly being impacted by practices/policies of others.

  2. Underscore Research

    I’ve been uploading my own music to Soundcloud since it 2009 which included a remixes of a few pop songs. And I was always shocked at how cool they where about that. I always licensed them under The Creative Commons model and never solicited money for them.

    Soundcloud, by their own admission was created for artists to share their music. Now, like, Youtube, it’s become just another platform for big media to stick it to the people. Bravo to Soundcloud for pushing back for as much as they have been. But in the end, Big Media will get it’s way.

    • Versus

      “remixes of a few pop songs”

      Unless those were done with permission of the rights-owners, that’s infringement.

      • Hobart

        Just because the law defines something as infringement doesn’t mean that current definition is the most sound, sane or reasonable one.
        Just because someone is called a pirate doesn’t mean they rape, murder, extort, rob and/or kidnap.
        For acting on their desire to have free access to media, a vast number of the world’s internet users are vilified by those who traditionally profit as gatekeepers. The focus is put on renumeration while the issue of censorship is brushed aside. Creative Commons was invented because there is an obvious need for copyright and intellectual property reform. Regardless of whether this story is accurate or not, the larger campaign of preserving an open and free internet shouldn’t be forgotten when gawking at these minor battles. We would do well to question the status quo and try to define for ourselves what is important in life and where our priorities and loyalties should lie.

      • Matt

        You can’t just remix a pop song, you need the acapella or songs stems in order to have something to work with, labels release acapellas of certain songs, that’s why you hear a lot of remixes of certain songs and no remixes of others, they never released the acapella.

        Labels release the acapella in order for DJs to use them, to remix them, to add to their performances and to promote the artists to different audiences then their genre spreads to. It’s a win-win-win situation for all involved. Nobody, nobody, is sitting at home listening to acapella versions of some song, they are released with the intention of being remixed. These songs are all being reported because of this lawsuit and it’s affecting the careers and established trademarks of many established DJs.

        Not to mention, you have to start somewhere as a producer, you can’t just approach labels and ask to remix their content, you will never get a response. Most DJs and producers get known from remixing known songs and then get to move onto getting official remix contracts.

  3. Izzy84

    So I’ll make a music platform where artists give their music away for free. And if copyrighted material gets on there well…that’s just how the internet works (I’ll ignore it). If you sue me then you’re a big evil label and nothing is my fault. I love songwriters, that’s why I give them so much opportunity for free promotion – the most difficult and rare thing on the internet.

    I love those responses – EDM and “bedroom producers” as examples of the wonders tech has done for music and songwriting.

    • Versus

      Well said. SoundCloud tries to act like the “good guy”, enabling musicians to thrive, but they play dumb about all the infringement they enable. You can’t have it both ways.

    • Versus

      Well said. SoundCloud tries to act like the “good guy”, enabling musicians to thrive, but they play dumb about all the infringement they enable. You can’t have it both ways.

  4. Izzy84

    What really gets me is how much people love defending tech companies. Are we in the tech business or are we in the business of representing songwriters and musicians?

    • King Shlomo

      Hey genius- nobody care about purchasing music anymore. Tech companies are the only way songwriters and artists can make money from their music by utilizing their social currency to advance tech companies while getting a piece of equity.

      If you wanna save the songwriters, than support tech companies that support them.

      • Versus

        A tech company that supports songwriters sounds like an oxymoron.

    • smg77

      Record labels and litigious bands like Metallica alienated music fans while tech companies gave them exactly what they wanted. It’s not confusing why things are the way they are now.

    • Anonymous

      it’s digital music news, not songwriters union. some people here work for tech companies.

  5. King Shlomo

    Soundcloud will be the biggest and best streaming platform in the world if they get licenses. Instead of shutting them down early in 06-07, the labels allowed them to flourish because they didn’t directly upload content unlike Grooveshark. The platform has lasted until now by skirting lawsuits and licensing complexities and their platform in robust and very cool. Why? Because of user generated uploaded the content which is why we flock to YouTube. Too watch things people create. Same with Soundcloud. You can hear rare remixes and songs first before radio.

    Now Soundcloud is valued at 700-1billion so the labels want in. And they should. Soundcloud introduces the most complex licensing negotiations but they’re the new business model.

    Sony should license them as should every other person.

    Fuck Spotify. Ek is a pirate, Doesn’t care about music creators and Spotify is not going to music industry lifesaver. Monetizing user generated content is the new business and Soundcloud is best at that

    • Oninon

      Ek isn’t the savior of the music industry. Nor is he a pirate. He’s a start up guy who managed to raise enough money to do what had to be done.

      Soundcloud isn’t going to be able to monetize all of the content on the platform simply because there is too much of it, and too many people who want a piece of that pie.

      Something is going to eventually come along that will allow labels to monetize UGC in a way that makes sense, and when the labels realize that is the best thing for everyone it will be the saving grace of the music industry.

      • Paul Resnikoff

        Ek is apparently extremely frustrated with how YouTube and SoundCloud somehow come out on top in all of this, even though they are paying far less than Spotify. Spotify gets vilified, SoundCloud doesn’t?

        Remember, Spotify gives a lot away for free, but they are paying for it, after all, whether that check is being written by Goldman Sachs or Pepsi, who cares, it’s something according to Spotify’s logic. And better than YouTube and SoundCloud.

  6. Willis

    We’ll see if the industry learned anything from their previous lawsuits that destroyed brilliant distribution tools, instead of embracing and benefiting from them.

  7. Pete Salmond

    I’m a bit frustrated that people keep banging on about DJ mixes and EDM. Soundcloud has an awful lot of musicians (myself) and unsigned bands using it legally to distribute and share their own original works.. Surely SC just needs to stop sharing of licensed music by its users, end of? I’m quite happy to see the end of stupid DJ mixes on SC, its not creative, skilled and is no better than a mix tape.

    Then SC can do what its good at, which is allowing creators/owners (not DJs) to share their music,

    • Sam

      DJing takes no skill? What an ignorant comment. Sure, you can premix a set and then fake it on stage, but real/good DJs don’t do that… Assuming DJing takes no skill just shows how little you really know about it. You should know what you’re talking about before you go mouthing off.

  8. Tcoola

    Djs migrating to mixcloud i hear. Dj mixes are great, skillful and creative. Sasha gu 13 ibiza got my attention to start producing. I dont dj myself. Its copyright infringement if its uploaded with out permission and for free. Paul, ur hot on spotify now? Apples to oranges. Youtube, yea they kill it. Whos gonna stop them?

  9. Phil

    I liked the original SC biz model. Charge content creators/labels/artists for uploading content, in different creator subscription tiers. Opposed to paying them from ad income.

  10. Daniel

    I can’t believe the labels haven’t realized they can stop wasting everyone’s time and just build their own mega streaming service…

    • Dewey Cheatham

      That would put a lot of lawyers out of work. Better to keep them busy waiting to see the ways tech companies and music fans give each other what they want, then strategically sue some out of business while demanding bigger and bigger pieces of the action from the rest, all while lobbying lawmakers for more control and pressuring ISPs to participate in shakedowns of small-time copyright infringers. It’s a nice living which requires absolutely no innovation, technological know-how, respect for consumers, etc. The record companies and publishers will simply litigate their way to profit! Don’t laugh, because it’s working. And it’s a long process, getting all the right dominoes in place, but the end game is an Internet with no privacy (except for those with deep pockets), no fair use, and no copyrighted content being utilized or transmitted in any way whatsoever without a significant amount of money flowing in exactly one direction: the bank accounts of the middlemen and their legal counsel. That goes for indie & unsigned content as well…gobs of revenue already is collected on their behalf, and the bulk of it is distributed to the most-played artists (Taylor Swift, et al.)…this has been the status quo for decades, so don’t expect that to change anytime soon. Muhahahaha YOU CHUMPS!

  11. Matt

    I’ve had a pro SoundCloud account for over 7 years, since their inception, built a large following and built my brand around my SoundCloud URL, in the last 2 weeks it has all been taken from me because of this war. I received 3 copyright infringement strikes in a row, all for remixes of artists on Sony label, they weren’t official remixes, but they were also discussed with Sony and the artists prior to posting, all were happy about them being online, promoting the artists to different audiences.

    The “authorization” SoundCloud demands for posting a track is almost impossible to get, I have friends who are A.R. reps and cannot do a thing about it, and their copyright team is almost impossible to hear back from. SoundCloud’s copyright team just provides copy & paste responses.

    Taking down tracks is one thing, removing accounts of hard working artists is another, SoundCloud has put themselves in this position as well as Sony. Sony could’ve built an online delivery system for music 10 times over by now and for way cheaper than trying to battle those that did built one.

    This is a horrible move on behalf of Sony, the only thing worse is the way SoundCloud is handling it. Even YouTube, a free service does not terminate ones account or hold strikes for life, they last 6 months and if you’ve shown you’re not a repeat offender the strikes are removed.