SoundCloud has long been a key force in the increasingly crowded streaming world, but the site has faltered in one crucial area: revenue. Without many official licensing deals, SoundCloud has been a useful platform for exposure, but that’s about it. The recent focus on how much artists make from services like Spotify and Tidal has put more pressure on SoundCloud, who announced today that they’ve reached a royalty partnership with over 20,000 independent labels.
In March, SoundCloud highlighted their six-month-old Premiere Partner feature, a level that pays partners in shared advertising revenue. Their new deal with 20,000 labels is through Merlin — a company that represents smaller independent companies in digital matters like this — and effectively adds labels and distributors like Beggars Group, Domino, Secretly Group, Epitaph, PIAS, Warp Records, Armada Music, Ninja Tune, Kontor Records to this list.
One of SoundCloud’s founders, Alexander Ljung, said in a statement that the deal will help the company to continue supporting independent creators.
Independent creators have always been at the core of SoundCloud, and with this partnership we’re thrilled to extend new revenue-generating opportunities to thousands of independent labels.
As the New York Times reports, this follows up another deal SoundCloud made in May with the National Music Publishers’ Association, another conglomerate of small companies. An important distinction in that case is the NMPA handles copyrights for songwriting, not recording.
The Berlin-based streaming service has also been in talks with major labels like Sony and Universal, but those discussions don’t seem to be going well. Furthermore, leaked contracts suggest that a paid subscription service is also in the works.
That idea seems off base since no one I know uses SoundCloud for subscription related-reasons. SoundCloud’s biggest strength still lies in its functionality as a music discovery tool. I’ve never “discovered” an artist on Spotify, Rdio, Beats, or Tidal — no matter how much they push the “mood” stations, I will never care. But SoundCloud is the place I’ve stumbled upon some of my favorite emerging artists, most notably Lorde, who uploaded her Love Club EP to SoundCloud in late 2012. Though “Royals” has been removed, all the songs on that EP have millions of plays. “Royals” was removed for a key reason — no matter how many times it was played, the label made no money off of it. And sure, she had a label deal already, but without SoundCloud, would Lorde be the superstar she is today? As royalties are incorporated into SoundCloud’s functionality, will it limit artists like Lorde in their ability to spontaneously post music?
Or, there’s cases like Miguel surprise-dropping an EP via SoundCloud at the end of last year. That EP has also been taken off the site, as his album drops in a few weeks, but would a move like that be possible at all if royalties were involved? As the company continues to add new revenue-generating aspects to their service, they would be wise to focus on preserving the discovery aspect of their platform instead of limiting it. It’s a crucial, built-in feature that all their competitors lack, and are desperately trying to achieve. SoundCloud already has it, here’s hoping they don’t lose it.