The world’s second biggest streaming service has made a game changing move by signing its first deal with a record company.
SoundCloud’s deal with Warner Music Group means that artists on WMG’s labels will now be paid royalties. The revenue needed to make this possible will be generated by SoundCloud’s new subscription service that will be introduced next year.
Both Warner Music Group and SoundCloud are very optimistic about the amount of revenue that the deal will generate for Warner Music artists while still fostering the connection and collaboration between an artist and their following that makes SoundCloud so unique and successful.
Jonathon Dworkin from Warner Music Group told The Guardian that the deal is “a win for artists, for rights-holders and for consumers.”
During a time when royalty payments by streaming services has become a bone of contention in the music industry, made most public by the feud between Taylor Swift and Spotify, this seems to be a step in a positive direction.
Currently, SoundCloud pays artists less than the average of $0.007 per song play by other streaming services, a figure that was criticized by Swift in the article she wrote earlier this year for the Wall Street Journal.
However, Warner will not be licensing its entire catalogue, which includes artists such as Ed Sheeran, Coldplay, Kylie Minogue and Bruno Mars, to SoundCloud in the deal.
SoundCloud has also held talks with Universal and Sony Music. Sony/ATV and BMG are already partners in SoundCloud’s new scheme known as OnSoundCloud. This venture will introduce advertising for certain artists, starting initially in the USA.