SoundCloud Is Close to a Licensing Deal With Universal

Maybe Napster taught everyone a lesson. Music labels, especially the majors, were incredibly slow to adapt to the peer-to-peer piracy that became commonplace around the turn of the century. The RIAA went after consumers in wildly unpopular lawsuits; bands and musicians lashed out at their fans; record sales that had been at an all-time high suddenly plummeted, to the point where comparing sales figures across eras now requires we adjust for the current deflation of the market. Now, as digital music streaming seems well on its way to dominating the market, labels are hoping to avoid past mistakes, to get on board at the right time and for the right cut of the profit. Sometimes this might include things that were unthinkable in 2000, such as striking deals with companies that previously existed in part to distribute your copyrighted material for free. But according to Music Business Worldwide, that's just what Universal is doing with the wildly popular streaming site SoundCloud.

Apparently, the parties are close to a licensing agreement that would allow SoundCloud to play music controlled by the major label. In return, Universal is seeking an equity stake in the company, and is attempting to require SoundCloud introduce a paid, subscription tier, something the site was reportedly already considering. Universal, along with the other major labels, already owns a piece of Spotify, currently the industry leader in the subscription streaming market. Insiders have speculated that a looming Universal deal was the impetus for last week's spree of song removals and account freezes on Soundcloud.