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SoundCloud and PRS reach licensing agreement, legal action off

By and | Published on Tuesday 22 December 2015


Right, everyone, Christmas is cancelled. PRS and SoundCloud have gone and ruined it all with some goodwill, which is not in-keeping with the season at all. I was promised a long drawn out bitter legal showdown and now I’m not going to get it. Next you’ll be telling me Santa’s not real.

Yeah, well, anyway, PRS For Music and SoundCloud have reached a multi-territory licensing agreement, which brings an end to the litigation that was launched by the UK publishing sector’s collecting society against the streaming service earlier this year. As previously reported, back in August, PRS announced that “following five years of unsuccessful negotiations” with SoundCloud, in a bid to agree a licensing deal covering the society’s repertoire, it was left with “no alternative but to commence legal proceedings”.

“Launched in 2008, [SoundCloud] now has more than 175 million unique listeners per month”, said PRS at the time. “Unfortunately, the organisation continues to deny it needs a PRS For Music licence for its existing service available in the UK and Europe, meaning it is not remunerating our members when their music is streamed by the SoundCloud platform”.

The dispute related to the online music platform’s existing service, which, of course, allows anyone to upload music. SoundCloud was originally primarily pitched at creators as a tool for sharing their work. But even if artists and producers upload their own music, if they are PRS members, then a licence is required from the society to cover those streams. And that’s before you consider the people uploading music to SoundCloud that they were in no way involved in creating it.

Like YouTube, SoundCloud tells rights owners that if they don’t want their music to appear on its platform they should issue a takedown notice. And like YouTube, SoundCloud has refined its takedown procedures over the years. Both tech firms argue that, under the safe harbours of copyright law, by operating a takedown system, they cannot be held liable if their users upload content without the rights owner’s permission.

Safe harbours have, of course, become increasingly contentious in the music community this year. And PRS is among the organisations in the music rights sector calling for copyright law to be amended so that services like YouTube and SoundCloud can no longer rely on safe harbour protection. Though the current law is somewhat ambiguous, and had it got to court this dispute would have been an important test case on what exactly European law says about the responsibilities of intermediaries in the unlicensed distribution of music.

The ambiguities mean that the case could have gone either way, though SoundCloud arguably had more to lose, [a] because PRS is concurrently lobbying for the law to be amended anyway, and [b] because the digital firm, which is busy pivoting its business model to become an ad-funded and subscription-charging streaming platform, could really do without the cost and PR damage of a high profile copyright lawsuit.

As it was, the litigation was already seemingly hindering SoundCloud’s efforts to sign up the majors to its new ad-funded/subscription gubbins. Universal was rumoured to be close to inking a deal when the PRS lawsuit landed, with those deal talks being frozen as a result.

Both parties insisted throughout that they’d prefer an out-of-court settlement here, and that’s what’s been achieved, just in time for Christmas. Which means we won’t get our fascinating test case on safe harbours and music streaming in Europe. Nor any passive aggressive bickering between the music and tech communities. Which is no fun for us, even if this is a good result for songwriters and publishers.

Though, of course, the specifics of the deal – which relates to past grievances and usage as well as future opportunities and streams – are not yet known. So it remains to be seen just how good a result this really is for songwriters and publishers. Perhaps there will be some fun to be had watching the songwriting community try to drill down into what has been agreed.

Meanwhile, PRS For Music chief exec Robert Ashcroft was careful to remind everyone that safe harbours are still a big problem, even if this safe harbours dispute has been resolved. He said yesterday: “On behalf of our members, I am pleased that we have been able to reach a settlement with SoundCloud without extended legal proceedings. This ends over five years of discussions on the licensing requirements for the platform, resulting in a licence under which our members are fairly rewarded for the use of their music”.

He continued: “The safe harbours in current legislation still present ambiguity, and obstruct the efficient licensing of online services, but our agreement with SoundCloud is a step in the right direction towards a more level playing field for the online marketplace. Many of our members love the SoundCloud service and I greatly appreciate their management’s willingness to work with us in the way they have”.

Meanwhile SoundCloud CEO Alexander Ljung added: “SoundCloud is a platform by creators, for creators; we’re working hard to create a platform where all creators can be paid for their work, and already have deals in place with thousands of copyright owners. PRS For Music is also fully committed to creators, and we’re pleased to have reached an agreement that will expand revenue opportunities, improve the accuracy of royalty distributions, and launch new services for our 175 million monthly active listeners on SoundCloud in 2016”.

It should be noted that there had been rumours a settlement was incoming on this nice little squabble for a few weeks now, so we carefully steered away from the topic in the our Review Of 2015 on the CMU Podcast, not wanting to bring the mood down with an amicable settlement. And if you want proof of that, why not check it out? And look, you can do that on SoundCloud! Who, let us remember, we’ve never sued.