News - 14/01/2016

UMG signs SoundCloud licensing deal, subscription service launch nears

UMG signs SoundCloud licensing deal, subscription service launch nears

Universal Music Group has signed a multi-year licensing deal with SoundCloud, a key step for the music streaming service that should lead to the launch of its subscription offering later this year. 

UMG’s CEO Lucian Grainge had been stalling on a SoundCloud deal for over a year, as he was not convinced about the commercial model being presented by the company. 

Now, Grainge's doubts have been quashed as he stated: “At UMG, we have long-embraced empowering entrepreneurs and innovative services such as SoundCloud. We look forward to working with SoundCloud and supporting the company’s evolution into a successful commercial service.”

SoundCloud lost precious months due to the lawsuit filed by PRS for Music, as music companies were understandably uncomfortable signing licensing deals with the service until the legal issues were resolved: SoundCloud reached a settlement with the PRSat the end of December. 

Now the question mark is what SoundCloud will bring to the table in terms of interface, discovery and apps, to make the service one that people will want to subscribe to. 

The company’s deal with UMG allows for monetisation of the service via advertising and also for the monetisation of user generated content a’ la YouTube. This could mean the return of DJ mixes to the platform, after takedown notices caused a number of them to migrate to MixCloud.

At the same time, the service needs to integrate major label catalogue in a way that preserves the experience for those users who are interested in non-mainstream music. Simply plastering the home page of the upcoming service with chart-topping pop artists is not something that will resonate particularly with the site’s core user base. 

SoundCloud now has deals with Warner Music (the first to jump on board) and UMG, Sony Music is still missing and the service is likely knee-deep in negotiations to get the label on board before launch.

After a difficult 2015 that came and went without a paid service materialising, SoundCloud is now ready to show the music streaming world that it means business. 

 

(Andrea Leonelli)  

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