SoundCloud inks landmark deal to pay indies for music streams

SoundCloud has announced a partnership with global rights agency Merlin, enabling over 20,000 labels and distributors worldwide to benefit from new promotional opportunities with the service.

The landmark partnership, announced overnight, includes some of the world’s biggest independent labels. These include UK’s Beggars Group, Domino and Warp Records, the US-based Secretly Group and Germany’s Kontor Records.

“The independent label community has long embraced SoundCloud as an innovative marketing and discovery platform, and Merlin is pleased to partner with the service at the next stage of its evolution,” said Chares Caldas, CEO of Merlin.

“Our deal significantly extends this existing relationship, and ensures Merlin members can participate fully in the long term value of SoundCloud’s future.”

Merlin members will gain access to a full range of reporting and content management tools. Additionally, those who join SoundCloud’s new creator partner programme ‘On SoundCloud’, will be able to receive new forms of revenue, including from their own uploads onto the audio platform as well as posts by SoundCloud users.

“Independent creators have always been at the core of SoundCloud, and with this partnership we’re thrilled to extend new revenue generating opportunities to thousands of independent labels,” said Alexander Ljung, CEO of SoundCloud.

The announcement comes just days after a SoundCloud contract between independent publishers was leaked. According to the contract, SoundCloud pays 10.5% of its revenue including from ads, or approximately 22% of its sound recording rights revenue, whichever is greater, to publishers.

The deal outlined in the leaked contract also introduces two paid subscription tiers – one giving users an ad-free listening experience, the other offering content as Limited Downloads as well as removal of adverts. The contract offers labels $0.18 per subscription, per user per month, should the amount be more than the sound recording rights revenue.

The agreement between Merlin and SoundCloud will cover involvement to SoundCloud’s subscription services, however the only detail announced is that the subscription tiers will be made available later this year.

Speaking to TMN last month, Dan Nevin, CEO of Australian Independent Record Labels Association (AIR), championed the use of Merlin by independent labels.

“[Labels] either sign up to a distribution company, or they sign up to a subscription type distribution deal – and we make sure that they don’t weigh in one way or another so it will depend on who I’m talking to – but certainly to the bigger labels, I will say to them 'have you looked at Merlin? Have you looked at what they’ve got on offer?'”

Merlin commands an approximate 10% share of US and global recorded music markets, protecting the rights of their clients and ensuring that they receive access to new revenue streams.

The rights agency has licensed key digital services with Spotify, Pandora, Beats Music, Google Play and Rdio. They have also settled various copyright infringement cases with parties such as XM Satellite Radio, and the now defunct companies Limewire and Grooveshark.