While Apple Music may not be the perfect music streaming alternative, it sure as hell has woken up music streaming players from their long slumber. Now SoundCloud, often termed as “YouTube of music” is planning to come up with a two-tiered subscription service later this year to generate more revenue as well as to march on the lines of its rivals Spotify and Apple music.
Frankly, this isn’t much of a surprise for me, considering the recent influx of “hyperactive” music streaming services we have started to see, ever since Apple Music’s official launch.
According to a report in WSJ, SoundCloud CTO and co-founder Eric Wahlforss has confirmed the rumors of a subscription service, which have been going around for a while. He also stated to build SoundCloud as a “stand alone business” indicating towards a more professional and revenue-based service than its current “free for all” model.
While he did not divulge any details about the nature of subscription, it is highly likely to be similar to the $10 subscription services by Apple Music and Spotify and will be offered in two versions. The lower price version will offer an ad-free service with limited access to sound tracks and the expensive version, dubbed as “SoundCloud Full Catalog Subscription Service” will offer unlimited access to all sound tracks sans advertisements.
SoundCloud boasts of about 100 million music tracks and 175 million users as opposed to 75 million users and 30 million tracks on Spotify.
SoundCloud separates itself from the rest, by allowing users to upload their music on SoundCloud for free, which can later be accessed by other users (much like YouTube videos). This particular feature has made SoundCloud as a favorite among EDM music lovers and DJs and mixing artists who upload their work on this platform. Many have risen to fame backed by SoundCloud.
It offers unlimited streaming of music free of cost and in some cases supports free downloading of some tracks as well. However this has led to many music companies and labels turn against it on royalty payment issues with Sony music recently taking off its content from SoundCloud citing monetization reasons.
This opposition has perhaps led SoundCloud to bring changes in its revenue and business model.
A set of leaked documents in June revealed an unsigned contract between SoundCloud and National Music Publisher’s Association according to which SoundCloud will pay 10.5 percent of its revenue, including ads, or approximately 22 percent of what it makes on rights and also pay extra royalties through its two-tiered subscription service.
Reportedly, labels would make an extra 18 cents each month on each user with the first tier model if the user base is higher than the revenue or sound recording rights, and an extra 80 cents for the full catalog option.
Furthermore, SoundCloud has also entered into agreements with an agency called Merlin which represents as many as 20000 independent labels and Warner Music which as per Mr. Wahlforss, “provide frameworks to hammer out licensing agreements for individual jurisdictions.”
Clearly with its new subscription services and new revenue model, SoundCloud is aiming to carve out a niche for itself among main stream music services and build itself into a more professional business rather than just a free ad-based platform.