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SoundCloud is making a splash in the music world

Photo by Sascha Baumann/Getty Images

It’s hard for new online music platforms to stand up to, let alone stand out from giants like iTunes and Amazon, but SoundCloud, a small company from Germany has managed to garner a respectable share of the digital music market without charging a fee.

However, that is about to change, at least for some users.

SoundCloud, long ignoring the threats of lawsuits and legal actions against its uploading and streaming policies, has finally cut a deal with the entertainment companies. In August, SoundCloud began adding advertising to its website and is introducing plans to allow artists and record labels to collect royalties.

According to the New York Times, the move has been in “reaction to industry pressure to license content and produce revenue.”

The article adds that some of the companies who were potentially thinking about laying a lawsuit on SoundCloud are now interested in acquiring equity in it.

The online streaming service is known for its electronic music selection and allows its users to upload their music and promote it for free. Users have to pay for the service although you can find websites where you can buy soundcloud plays. This has been a boon for smaller musicians to reach a wider audience with their music. Although intended for original music, the site has grown to include music from professional artists and record companies, including the likes of Beyonce and Lorde.

Founded in Berlin in August 2007 by Alexander Ljung and Eric Wahlforss, SoundCloud has over 40 million registered users and over 200 million listeners. President Obama and New York Mayor Michael Bloomberg have both used SoundCloud to upload and share their speeches.

The company has used pro accounts and private funding to remain in business, but this announcement includes information about subscription plans for their customers as well as introducing advertisement revenue plans. The plan announced on August 21st includes a tier for professionals to release music accompanied by selected advertising.

SoundCloud doesn’t have agreements with the major labels, however, it is pursuing them. Jeff Toig, chief business officer of the company since 2013, told Billboard magazine, it is in “active and ongoing, advanced discussions” with Sony, Universal and Warner Music.

SoundCloud has already signed advertising deals with Red Bull, Sound Select, Spinnin and music publishers BMG and Sony ATV/EMI. It has also completed deals with independent artists Blackbear, Cyra Morgan and others.

Previously, the company had made arrangements with Universal Music to allow it to remove or delete tracks on the website that were in violation of copyright. This created an outcry with paid SoundCloud subscribers, but may have been done in preparation for licensing the music streaming service currently allows to be downloaded.

Being able to upload your tracks for others to hear and comment on has made SoundCloud a site for new musicians to get exposure. The effects the new licensing and advertising agreements will have on this community aren’t known, yet, but the ‘cool factor’ the site has long enjoyed has definitely been put up for sale to the highest bidder.

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