Monetisation a Part of Soundcloud's business model since day 1

09:37 Sep/16/2014


We all know SoundCloud. The site, which began in 2007, allows users to upload, stream and share music online for free, and with no adverts. SoundCloud became popular... Very popular!

With 175 million listeners around the world each month, music streaming service SoundCloud has become near ubiquitous, particularly in the fast-moving world of dance music, where releases and remixes often premiere on SoundCloud months before getting an official label release.

But the free ride for listeners is about to end. SoundCloud’s lack of royalty or licensing deals with record labels means it’s been plagued by threats of legal action over copyright infringement, as well as by complaints from artists for taking down content deemed to infringe copyright (most memorably by electronic artist Kaskade, who criticised the service after it deleted tracks from his page owned by the producer’s former label Ultra).

But the free ride for listeners is about to end. SoundCloud’s lack of royalty or licensing deals with record labels means it’s been plagued by threats of legal action over copyright infringement, as well as by complaints from artists for taking down content deemed to infringe copyright (most memorably by electronic artist Kaskade, who criticised the service after it deleted tracks from his page owned by the producer’s former label Ultra).

Earlier this year news surfaced that Twitter was considering buying SoundCloud, a move which would likely have forced SoundCloud into acquiring licenses with record labels. It now appears that SoundCloud has taken the matter into its own hands, as The New York Times reports that “as part of a new licensing deal with entertainment companies, SoundCloud will begin incorporating advertising and for the first time let artists and record labels collect royalties.”

It was recently announced that advertising would be introduced to the service, along with a subscription service, but chief business officer Jeff Toig has claimed it was always part of the plan.

Speaking to Music Week, Toig said: "Building a company takes time and SoundCloud has been built in three phases.

"Firstly, we wanted to build tools for creators. Secondly, we wanted to help artists build a huge audience through our service. Now we’re taking the third step - enabling creators to make money through the platform."

One addition to the service is called On SoundCloud, which serves selected 'premier' users with opportunities to make money. Although it's only available in the United States at the moment, over 20 content partners are said to have signed up, including labels, publishers and emerging artists.

Toig added: "We’re working to aggressively roll out the On SoundCloud Premier tier to more creators. Ultimately, we want all creators to have the opportunity to make money through the platform and we’ll be working to expand the programme globally over time."

Red Bull, Jaguar and Comedy Central have already signed up as advertisers but deals are yet to be agreed with Warner, Universal and Sony despite ongoing talks.

 



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