SoundCloud is on the verge of confirming a major licensing deal with Universal Music Group, according to reports.
After months of negotiation, the two parties are on the cusp of an agreement that favours Universal, sources told Music Business Worldwide.
Universal has been demanding an equity stake in SoundCloud for any licensing deal to be signed, as well as guarantees about the platform’s planned subscription tier. Warner is understood to have taken 5% equity in SoundCloud as part of its own deal, and Universal wants more.
An insider told MBW: “Universal had a couple of aggressive choices: they could either sue SoundCloud, which wasn’t off the table, or refuse to play ball with them and watch them slide out of existence as money ran low.
“But Universal knows that a world with a SoundCloud that it can control is better than a world without SoundCloud full stop – especially if that leads to a hundred clones popping up online.
“Initially, UMG’s demands were completely unacceptable to SoundCloud, but the balance of power – of who needs who to prosper – appears to have shifted since those days.”
Last week SoundCloud embarked on a spree of takedowns and suspensions to penalise users for uploading copyright infringing material, but the drastic measures affected some legitimate rights holders too, including British DJ Plastician.
SoundCloud has so far struck deals with three major rights-holders – Warner Music Group, indie label representative Merlin, and publishing collective NMPA – on the basis that the streaming platform will launch its subscription tier soon. The missing link is Sony, the major label that’s believed to be the driving force behind many of last week’s takedowns and suspensions.
Sony’s actions have supposedly spooked SoundCloud’s investors, who are now pushing harder for the company to reach agreements with the labels before any more money is made available.
Last week FACT’s Scott Wilson took a closer look at the streaming platform to ask: what the hell is happening with SoundCloud?