Leaked SoundCloud contract shows plans for ad-free subscriptions and label payment

The contract outlines two premium tiers to sit alongside the ad-supported service.

A leaked contract has emerged online that reportedly shows SoundCloud’s plans for monetising its service and the deals it plans to offer labels to host their music.

The contract appeared first on Digital Music News yesterday (June 1), and outlines plans for two possible premium listening tiers to sit alongside the ad-supported tier it announced last year, as TechCrunch notes.

If the contract is genuine, the amount SoundCloud will give to labels is either 10.5 per cent of its overall revenue including ads or 22 per cent of its revenue on sound recording rights, depending on which is higher.

The “Additional Services” tier would give users an ad-free experience and download a limited amount of music. Labels would be able to take $0.18 per Additional Services user per month if it’s higher than the compensation agreements between label and SoundCloud.

The “SoundCloud Full Catalog Subscription Service” meanwhile would allow access to a much larger amount of music, with labels receiving $0.80 per user if the amount is higher than what the label would get in rights income otherwise.

The contract appears to be the deal SoundCloud has struck with a group of independent music publishers, who would get paid a $350,000 advance on the terms explained in the contract, split between them based on a market share of the music listened to on the service.

Though the contract doesn’t apply to the major publishing companies of Sony, Warner and Universal, it’s believed that a similar deal is being sought with them – if you have time to kill, you can read the whole 19-page document at TechCrunch.

The moves follow a turbulent time for SoundCloud – last month Sony began pulling music from the service, blaming “a lack of monetization opportunities” on the platform.