20,000 indie labels just licensed SoundCloud – and expect good money

The commercial representative of 20,000 indie labels and distributors across the world, Merlin, has agreed an above-board licensing partnership with SoundCloud.

The deal covers the catalogues of some of the world’s biggest independents, such as Beggars Group, Domino, Secretly Group, Epitaph, Ninja Tune, [PIAS], Warp Records, Armada Music and Kontor Records.

Three things are especially interesting about the deal:

  • Merlin members, who make up around 10% of worldwide record market share by value, have joined On SoundCloud, the company’s advertising-funded programme that shares revenue with copyright holders – both for tracks they upload themselves and user-uploaded music. On SoundCloud is currently paying out around €150k a month;
  • The labels will get access to a new range of reporting and content management tools that allow greater direct control (and presumably takedowns) of content;
  • Merlin has not confirmed whether it’s taken any equity in SoundCloud as part of the deal – but it’s a likely bet. Warner Music Group licensed SoundCloud last year, becoming the first major label to do so. It is believed to have taken a 5% stake in the company as part of the agreement. There’s always a lot of industry chatter about the double-digit equity that the major labels own in Spotify, but people often forget that Merlin also has a significant stake in the streaming platform. SoundCloud is likely to have followed suit.

The biggest payday for the indies from all of this may be yet to come, however.

Berlin-born SoundCloud, which boasts 175m monthly free users, is planning to launch a ‘unique’ subscription service later this year.

Merlin’s deal also covers licensing for this launch.

All of which means that, in SoundCloud’s quest to ‘go legit’, now it just needs to convince Sony and Universal that it can come up with the monetary goods…

“Our deal ensures that merlin members can participate fully in the long-term value of SoundCloud’s future.”

Charles Caldas, Merlin

Charles Caldas, CEO of Merlin, said: “The independent label community has long embraced SoundCloud as an innovative marketing and discovery platform, and Merlin is pleased to partner with the service at the next exciting stage of its evolution.

“Our deal significantly extends this existing relationship, and ensures Merlin members can participate fully in the long-term value of SoundCloud’s future.”

Alexander Ljung, SoundCloud’s founder & CEO (pictured), said, “I’m excited to announce our largest independent label partnership to date with Merlin, the global rights agency for the independent label sector.

“Independent creators have always been at the core of SoundCloud and with this partnership we’re thrilled to extend new revenue generating opportunities to thousands of independent labels.”

In May, SoundCloud signed a similar-sounding deal with the NMPA – the trade body representing the world’s leading independent publishers.

While all this is going on, Sony is pulling down chunks of catalogue from the platform, presumably as a strong-arm tactic during licensing negotiations.

This upset prominent dance DJ Madeon. The French artist tweeted that Sony was “holding your own artists hostage” – although added that he had “much love” for his label Columbia.Music Business Worldwide

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