Watch out, Spotify: SoundCloud now has licensing deals with all three major labels

A serious new streaming player could be in the works.
A serious new streaming player could be in the works.
Image: Reuters/Gus Ruelas
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This post has been updated.

SoundCloud has signed a licensing deal with Sony Music Entertainment, meaning the online music site now has agreements in place with all the “big three” record labels, according to reports from The Verge and trade publication Music Business Worldwide, citing unnamed sources.

Berlin-based SoundCloud confirmed the deal on Mar. 18. “We are pleased to be making content from Sony Music Entertainment available to SoundCloud’s large user base of highly-engaged, passionate music fans,” said Dennis Kooker, Sony Music Entertainment’s president for global digital business.

A deal with Sony is a coup for SoundCloud because the two have had a rocky relationship. In May last year, Sony pulled its music from the service after a breakdown in talks between the two parties. Bringing Sony back on board would improve the odds of SoundCloud’s plan to introduce a paid-subscription service similar to Spotify or Apple Music.

A Sony deal would give SoundCloud access to tracks by some of the world’s biggest stars, including Beyoncé, the Foo Fighters, and Justin Timberlake. Sony will also receive equity in Soundcloud, the reports say. Warner Music Group, the smallest of the “big three” labels, currently has a minority stake in SoundCloud. Both labels also own shares in Spotify.

In November 2014, SoundCloud struck a deal with Warner, which included a licensing agreement, an equity stake worth between 3% and 5%, and, importantly, indemnity from past copyright infringement. The streaming service then inked agreements with Universal Music Group (the biggest of the majors) and the Merlin Network, which represents independent labels.

To date, SoundCloud hasn’t found an effective way to wring much money from its 175 million monthly active users. It reported a loss of €39 million ($44 million) on revenue of €17 million in 2014, according to its most recent publicly available accounts. But the addition of Sony to its stable would mean it has a better shot at turning its listeners into paying customers—and reduces the risk of being sued into oblivion by rights holders.

Update (Mar. 21): This post was updated with confirmation from SoundCloud.