In the midst of the debate over how major labels can now flag your SoundCloud account (seemingly without SoundCloud knowing what was done), we got hit with some news that does not surprise us at all. Bloomberg's report states that SoundCloud is apparently nearing completion on a deal that will give the three major music labels (Universal Music Group, Warner Music Group, and Sony Music Entertainment) 3%-5% stake in SoundCloud, which is said to cover "licenses to continue playing songs from the biggest labels and avoid potential legal disputes." Those percentages of SoundCloud also come with future revenue. Bloomberg also reports that the "timing of an announcement with the labels is in flux because some of the music companies are closer to a deal with the startup than others."
As of right now, none of the big three are commenting.
One thing that CMU points out about this deal is how this news is only in regards to the big three major record labels, which makes this a bit more interesting. What appears to be the UMG SoundCloud account hasn't made any sort of moves since eight months ago, while Sony Music Entertainment's page has done nothing. Warner seems to be way more active, even if a lot of their recent activity has been making playlists and reposts. The question we have first is: how does this impact independent labels, i.e. the ones with accounts that are WAY more active on a way more consistent basis than the big three? Will that 3%-5% stake in SoundCloud effectively push their content past everyone else? Independents are currently going through it with YouTube over a dispute regarding licensing deals, and don't forget: a number of major labels reportedly held stakes in YouTube prior to Google purchasing the video site. Where does this leave the independents?
CMU also notes the timing of this rumor announcement; all of this is happening at the same time SoundCloud is reconfiguring its app, which many believe will only help the audio streaming service get closer to being able to monetize streams. While that could possibly throw some funds into the pockets of highly-trafficked pages, we again have to wonder how all of this will benefit the little guy. Will those who helped push the service to the heights that it is reaching now (a group that includes scores of independent record labels, bedroom DJs, and slept-on producers around the globe) end up being pushed aside because the majors are now involved? SoundCloud has already been retooling their service for listeners, not aritsts; will these changes end up forcing many to find a more suitable alternative to the service?
We'll keep you posted on any further developments.