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Warner announces licensing deal with SoundCloud

By | Published on Wednesday 5 November 2014


Why do people always want to break the ground? What has the ground ever done to hurt anyone? The ‘land’ just gets marked, but the ‘ground’ always has to be broken. Always. Anyway, Warner Music last night announced a “groundbreaking” and “landmark” partnership with SoundCloud. Though given that clouds are mainly found in the sky, I’m not sure what ground or land has to do with any of this. Unless the whole thing’s a bit foggy. Which it possibly is.

Anyway, as they say, yes, Warner Music is the first major label to sign on the dotted line, dance the ‘deal done dance’ and sell a little more of its soul to the digital devil by going into business with SoundCloud. Under the deal confirmed last night, Warner will join the digital platform’s new ad-sales scheme and provide music to a new subscription streaming service planned for 2015. And, YouTube style, the major will seemingly get greater content control and have the opportunity to monetise user-generated content as part of the alliance.

As much previously reported, right here, on many a day gone by, to the point some of you might be bored of me saying it, SoundCloud has been very busy indeed in the last year or two trying to develop new revenue streams beyond charging content owners for storage and streaming bandwidth.

This was initially to placate record companies and music publishers which, while liking the SoundCloud platform and recognising the firm’s growing community of users, didn’t like the fact that using the service was, for them, all cost centre and no revenue. Though more recently, it’s thought that the digital start-up’s own investors have also been calling for new revenue streams to be launched, once it became clear the firm was unlikely to be bought in a mega-bucks deal (which, of course, is how early doors investors usually profit) in its current form.

But SoundCloud has found negotiating with the major music rights firms slow going, its initial offer seemingly being knocked back. In July, it was reported that the digital firm was offering the majors equity to sweeten the deal and, according to the Wall Street Journal, Warner will indeed get a few percent of the SoundCloud business as part of this arrangement. Though, even with the equity offer, Universal was recently rumoured to have walked away from the negotiating table, and sources have told the WSJ that both it and Sony remain hesitant about SoundCloud’s current offer.

Though, while the full-on subscription service will really need all three of the majors on board, not to mention the big indie label distributors and Merlin-repped independents, SoundCloud’s pre-roll ad scheme can be very much rolled out and tested with a smaller number of rights owners in the mix, and Warner – while the smallest of the majors – is a significant partner in that domain.

Confirming the “groundbreaking, landmark” deal, Warner Music Group’s Chief Operating Officer Rob Wiesenthal told reporters: “This leading-edge partnership reflects WMG’s commitment to establishing new and alternative business models that recognise the value of music for our artists. SoundCloud is a platform built on music innovation and it has a rare ability to drive music discovery while enhancing the connection and collaboration between an artist and their following. Our deal will foster that relationship, while providing a powerful range of income opportunities for WMG’s artists and songwriters”.

Meanwhile SoundCloud’s CEO Alexander Ljung added: “We’re thrilled that Warner Music Group will be the first major label to join our new creator partner programme. We expect to generate significant revenue for Warner and its artists in the months and years ahead as we roll out an ad-supported offering and subscription service that delivers real value to the industry”.

SoundCloud has at times called itself the ‘YouTube of audio’, and like YouTube is a popular tool amongst music marketers, but it is yet to convince many in the wider label and artist community that its business model can truly work. And, of course, there are some in the artist world yet to be convinced that any of the current streaming business models really add up long term.

It’s like Taylor Swift said: “Fucking Soundcloud, they can fuck right off, they’re not getting any of my shitting music, the stingy fuckers, people can buy my fucking music if they fucking want it, BUY IT, give me some fucking money, give it me NOW”. Well, I suspect that’s what she said. Which I’m not sure was entirely necessary. Still, perhaps the Warner deal can demonstrate – even to Swifty – the value of all things Sound in the Cloud.