Soundcloud has come to an important agreement with 20,000 labels through a deal with licensing company Merlin.
Merlin represents a number of well-known independent labels in digital negotiations including iconic British dance-label Warp (Hudson Mohawke and Rustie) and one of the most influential group of labels in Europe, The Beggars Group (FKA Twigs and Vampire Weekend).
The Swedish-based site has become extremely popular for offering free streaming but, at the same time it’s copped flack its handling of royalties.
As reported by The Guardian, Soundcloud founder Alexander Ljung said in a statement, “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.”
Merlin chief executive Charles Cadas weighed in on the deal commenting on the changing ways music is consumed and monetised. “As the value of the streaming market grows, people are starting to realise that consumption is the new sales,” he said.
“Anywhere that people are listening to music is actually the end-game now.”
Ljung said that people have been making money indirectly from Soundcloud for a long time now, “booking gigs and so on.” However, he conceded, “they do want to know how they can also make money directly. It’s always been fairly obvious that this is where it’s going.”
Soundcloud also reached a deal with Warner, one of the big three record labels, last year but it has run into trouble with Sony, who pulled some of their catalog from the site last month.
This week leaked contracts showed that Soundcloud was looking to introduce a three-tier subscriper system with two paid options. That contract included a clause which would mean independent labels would be paid a $350,000 advance upon signing up and would be ensured that if Soundcloud signs a better deal with a major label, independent labels would also reap the rewards.