Analysis

YouTube as well as SoundCloud should worry about PRS lawsuit


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soundcloud

We reported yesterday on PRS for Music’s decision to sue SoundCloud for copyright infringement. Over the course of the day, the key contradiction between the two parties’ statements became clear: it’s about whether SoundCloud is willing to strike a licensing deal, and specifically whether that deal would apply to both its existing free service and its upcoming subscription tier.

Meanwhile, it also became clear that this lawsuit may have strong implications for YouTube, not just SoundCloud.

But first, the seeming contradiction. “SoundCloud does not accept that it requires a licence for its existing service in the UK and Europe and has informed us that it will be defending the claim. Amongst other defences, SoundCloud is seeking to rely on the European ‘safe harbours’ for online intermediaries,” claimed PRS for Music yesterday.

“It is regrettable that PRS appears to be following this course of action in the midst of an active commercial negotiation with SoundCloud,” claimed SoundCloud.

Actually, though, this is not necessarily a contradiction. SoundCloud’s existing service offers free, unlimited streams of music uploaded by its users. Its yet-to-launch service will charge a monthly subscription for access to a catalogue of licensed music, with deals already inked with WMG and Merlin, and UMG expected to follow shortly.

The prospect of a 175m-listeners streaming service covered by safe-harbour, with licensing agreed only for its much, much smaller subscription tier, would certainly get PRS for Music’s goat.

By emphasising the “active” nature of its commercial talks, though, SoundCloud is pointing observers towards another conclusion: that the PRS lawsuit is more of a negotiating tactic, using legal action as extra leverage at the table.

People will pick their scenario according to their prejudices for or against either side: another tech/music polarisation. But what we can all agree on is that if this case does go to court, it will have serious implications beyond SoundCloud, stretching all the way to YouTube.

In recent months, when rightsholders have complained about what they see as misuse of safe-harbour protection, they have often grouped SoundCloud and YouTube together as examples. YouTube, of course, has a licensing deal with PRS for Music last renewed in 2013.

If PRS for Music takes SoundCloud to court and wins, delivering a blow to that mooted safe-harbour defence, think how much stronger its hand will be when the time comes (as it soon will) to renegotiate its YouTube deal. Multiple sources have suggested to Music Ally that this is the real significance of the SoundCloud lawsuit. “The stakes are super high,” as one of them put it. Indeed.

Stuart Dredge

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One response
  • YouTube will obviously buy or help SoundCloud because safe harbour extends to Google search as well and believe me, William Patry will be waiting with bells on. Also, revenue splitting and third party audits of the data to determine said splits, will finally give the blockchain mainstream acceptance due to it’s requirement to enable this inevitability.

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