SoundCloud has signed a landmark licensing deal with music publishing group the NMPA – just as Sony pulls key artists from the service in the US due to a ‘breakdown in negotiations’.
The National Music Publishers’ Association (NMPA) is the trade association representing all American music publishers and their songwriting partners.
It has negotiated the terms of a Rights Agreement with SoundCloud, which it says will ‘enable independent publishers and songwriters to receive royalties through the monetisation of content that contains their compositions on SoundCloud’.
It is unclear whether SoundCloud has offered the NMPA’s members an equity stake in its business, but NMPA CEO David Israelite said: “This agreement ensures that when SoundCloud succeeds financially, so do the songwriters whose content draws so many users to their site.
“I am thrilled that we could agree on terms that will benefit both creators and the SoundCloud platform that has brought online music access and creativity to a new level.”
The publishing deal comes six months after SoundCloud inked a licensing deal with Warner Music Group.
Warner is believed to have taken up to 5% equity in SoundCloud as part of the deal, adding to investment into the company that’s now surpassed $120 million.
“This agreement ensures that when SoundCloud succeeds financially, so do the songwriters.”
David Israelite, NMPA
Loss-making SoundCloud is valued at over $1.2 billion. In August last year, it introduced On SoundCloud partner programme, a way for labels and artists to monetise their music through advertising.
In the first six months of On SoundCloud, the company paid out around $166k a month – over $1 million (€890k) in advertising revenue to partners including labels, audio partners and emerging artists.
Two months after that announcement, SoundCloud’s payout figure is now believed to have surpassed $2m.
Which is all good news for a platform that was previously paying nothing… but it doesn’t appear to be good enough for Sony Music.
According to Billboard, the major label has pulled music from major artists including Adele, Hozier, Kelly Clarkson and Passion Pit from SoundCloud in the US.
This is due to a breakdown in licensing negotiations. Sony is clearly likely to be demanding an equity stake in SoundCloud, like Warner before it.
A SoundCloud spokesperson said “We are in ongoing conversations with major and independent labels and will continue to add partners to the [On SoundCloud] program.
“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.”
SoundCloud posted a $29 million loss on $14 million revenues in FY 2013.
The German-born site was launched in 2008 by Alexander Ljung and Eric Wahlforss.Music Business Worldwide