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News March 21, 2016

SoundCloud inks deal with long-time holdout Sony

Former Editor

SoundCloud has just made some serious headway for its soon-to-be-launched subscription service; it’s inked a licensing deal with long-time holdout Sony Music.

The deal now gives the Berlin-based companyaccess to the recording catalogues of all three major labels, and has industry whispers chiming its on-demand, paid subscription service will debut in the coming months. The service is predicted to be similar to those offered by Spotify or Apple Music.

According to Music Business Worldwide, SoundCloud’s deal with Sony is similar to that which it holds with Universal and Warner. Sony now has equity in SoundCloud and has been invited to participate in its next funding round.

In the past two years, SoundCloud has struck deals with major music industry players including more than100 partners. Aside from Universal, Warner and now Sony, independent group Merlin and the US National Music Publishers Association have agreements with the service, as do artists as Prince, Kanye West and Aphex Twin. In the US, it shares proceeds with labels and artists from its advertising, paying out $1 million by last March.

The agreement with Sony Music has proven difficult for SoundCloud. The label pulled much of its catalogue off of the service last May over claims the service doesn’t offer enough money-making features for its artists.

SoundCloud has also faced criticism from the IFPI for “taking advantage of exemptions from copyright laws that simply should not apply to (it).” British collecting society PRS for Music sued it for copyright infringement last August and settled four months later.

SoundCloud posted a €39.1 million (A$62.2 million) loss in 2014 on revenues of €17 million ($27 million). While its 2015 results don’t look like they’ll be filed until 2017, it will need to expand to keep up with its competitors.

As previously reported by TMN, Spotify is seeking to borrow $500 million (AU$703.4 million) from investors just eight months after it raised the same amount by selling equity at a valuation of $8.5 billion ($11.9 billion). It’s apparently in talks with TPG Capitalabout a possible investment. Meanwhile, Pandora raised $300 million ($427 million) in December. Deezer secured €100 million ($159.2 million) in January, and this week announced it is available on the Apple Watch, where Spotify doesn’t feature.

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