SoundCloud Signs Warner, Grows Mix of Music and Social Media

SoundCloud, which has mixed music and community for eight years, now boasts 150 million registered users who have uploaded over 100 million tracks and clips. Such artists as Prince, Snoop Dogg, Beyoncé and Drake have used the platform to release special tracks, remixes and promos. But as SoundCloud transitions from a free service with unlicensed content to one that licenses content and shares revenue, it teeters between two different creative models and the potential of a major breakthrough or bust.

The Berlin-headquartered company has created what Bloomberg calls “an audio-based social network” in which anybody can upload a song (or other audio) and “use SoundCloud’s tools to get it out there.”

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SoundCloud users collectively upload “about 12 hours of audio every minute,” notes Bloomberg, creating an ideal space for discovery of new artists. “For an adventurous listener, it’s an aural creativity bonanza.”

That formula hit a nerve. SoundCloud’s user-base exploded 15-fold from a mere 10 million in 2011. According to Bloomberg, comScore reports SoundCloud’s traffic across desktop and mobile rose 14 percent in May from a year earlier, and 142 percent from two years ago.

Now SoundCloud is after licensing content from mainstream record labels and says it is in talks with all of them. The first of the three major labels to sign a deal, Warner Music Group has made some of its content “a sanctioned component of the service.” Earlier, the company made a rights agreement with the National Music Publishers Association, which represents independent labels, says Billboard.

SoundCloud sells itself as utilizing a scheme for generating and sharing revenue with the major labels and the music creators, without requiring a full-catalog agreement, as Spotify and Apple prefer.

The problem appears to be that it may not be monetizing content sufficiently. Sony pulled Adele, Kelly Clarkson and other major artists off SoundCloud, and although no one spoke for the record, Billboard cited an unnamed Sony source complaining about a lack of monetization opportunities. Another challenge is to convince the labels that the company is dealing with unauthorized uses of intellectual property.