SoundCloud is close to agreeing on a new licensing deal with Universal Music Group that will reportedly allow UMG significant equity in the streaming service, according to a new report in Music Business Worldwide. Sources report that the music giant has been chasing a significant equity stake in the streaming service in exchange for licensing rights as well as guarantees on a future subscription-based tier. The news arrives following growing reports that SoundCloud's impending demise was near as the company wrangled with new business models and suspended various accounts to become monetarily successful including a recently signed royalty deal with 20,000 indie labels earlier this summer.
An MBW source explained, "Universal had a couple of aggressive choices: they could either sue SoundCloud, which wasn't off the table, or refuse to play ball with them and watch them slide out of existence as money ran low. But Universal knows that a world with a SoundCloud that it can control is better than a world without SoundCloud full stop - especially if that leads to a hundred clones popping up online." Once the deal is finalized, UMG will be the second major to sign with SoundCloud following Warner Music Group's lead who signed a similar deal last November that granted the label a five percent stake in the company.