SoundCloud close to inking deals with record labels

Audio streaming platform SoundCloud is allegedly finalising licensing deals with the major labels and publishers.

In May, rumours about a potential acquisition of SoundCloud by social media behemoth Twitter were put to bed. However the spotlight sparked questions as to whether SoundCloud could improve Twitter’s core service enough to warrant a buy-out (estimated at $700 million) given SoundCloud’s limited licensing agreements with the major labels and music publishers. SoundCloud currently operates under the Digital Millennium Copyright Act (DMCA) loophole, giving the site immunity due to its third-party, user-generated content.

Now, SoundCloud is said to be nearing deals with Universal Music Group, Sony Music Entertainment and Warner Music Group that allows it to continue playing songs to its 250 million+ listeners a month and avoid legal disputes.

The labels don’t come up short however, aside from its long-running use of SoundCloud as a marketing tool, inside sources reported on by Reuters have said SoundCloud has offered each major label a 3-5% stake along with a percentage of future revenue. SoundCloud will pay the labels based on how many times a song is played until its revenue reaches a certain level.

New estimates of SoundCloud’s worth have it valued at $500-600 million.