SoundCloud strikes NMPA deal but sees Sony pull songs



Yesterday was a mixed day for SoundCloud, to say the least. The streaming music service struck a notable licensing deal with the US National Music Publishers’ Association, but then saw major label Sony Music pull tracks by artists including Adele, Hozier and Kelly Clarkson from SoundCloud in what’s being described as a “breakdown in negotiations” between the two companies.

The positive first: that NMPA deal, which the publishing association’s boss David Israelite claimed “ensures that when SoundCloud succeeds financially, so do the songwriters whose content draws so many users to their site”.

Naturally, no details of the actual agreement have been released apart from the fact that the royalties will come from “the monetisation of content that contains their compositions on SoundCloud” – suggesting a percentage of ad revenues rather than per-stream payments across the board.

The not-so-positive: the Sony Music takedowns, which Billboard claimed were due to “a lack of monetisation opportunities” on SoundCloud. A strange phrase, since there are now monetisation opportunities on the service through its On SoundCloud advertising initiative, albeit small at the moment with $1m paid to partners between August 2014 and March 2015 and another $1m since then.

The dispute is more about the lack of licensing terms that Sony and SoundCloud can agree on for the label to start participating in that particular opportunity – discussions thought to involve an equity stake in the company.

These are testing times for SoundCloud, which for all its success in growing and attracting artists and labels under its existing licensing structure, needs formal deals with labels and publishers in place for its short-term aim of a paid subscription tier, and its long-term goal of an IPO or big-bucks exit by acquisition.

It’s not just majors like Sony rattling sabres at SoundCloud either: at the recent AIM Music Connected conference of indie labels in London, there was open discussion about labels trying to move artists’ fans from SoundCloud to Spotify and other services paying per-stream royalties.

Plus there’s Jane Dyball – newly-installed interim CEO of the NMPA’s UK equivalent, the Music Publishers Association – and her “SoundCloud haven’t even bought anyone a cup of tea” comments in Music Ally’s report last week.

The overall picture is of a very important moment in SoundCloud’s development: it’s still broadly seen as a good actor within the industry, but there is also growing impatience for it to accelerate its move towards a business model that will pay off for musicians and rightsholders.

Plus, of course, there’s the dynamic of major labels’ desire to get a piece of SoundCloud before any lucrative exit – and their awareness that their deals are necessary hurdles to clear before any such exit.

“We are in ongoing conversations with major and independent labels and will continue to add partners to the program,” SoundCloud’s spokesperson told Billboard, in a carefully-worded statement reminding the industry that Sony’s ability to remove tracks is a sign of its good-actor status.

“We’ve always put control in the hands of creators, and anyone who makes music and audio can decide when and how they want to share it with fans, allowing artists to essentially broadcast out to the world the availability of new content.” The dealmaking continues.

Written by: Stuart Dredge