SoundCloud Will Show Advertising to Satisfy Content CreatorsAdded: Sunday, August 24th, 2014
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SoundCloud currently accounts for 175 million monthly listeners, thus taking the second line in the list of top streaming music service in the world. The first is, of course, occupied by YouTube. However, the service hasn’t paid royalties to the artists for their plays on its website and mobile applications. Until now.
The content creators and copyright owners realized that they upload their music for free to SoundCloud in order to get something the money can’t buy: an audience of fans and information on how and where their music being listened to. But as the streaming service has grown and raised more funding (the company values at $700m), it has faced more pointed questions about when SoundCloud will start paying royalties.
And so, the company is taking its first step: a select group of invited partners in the United States will have advertising shown or played alongside their audio content. Looking forward, the content creators will receive “the majority” of the money paid by the advertiser. In fact, this is more a share of revenues rather than a per-stream payment like with other services.
The adverts will only be seen and heard by the American users for now, on the SoundCloud site and mobile applications, but not in tracks embedded in other places across the web.
The company explains that the content creators will have control under the new program: for example, they will be able to turn on advertising for certain tracks, rather than on everything. The advertisements will be of a following format: radio-style audio ads, display advertising on mobile apps, promotion of SoundCloud tracks and profiles, sponsorships and contests. Within the test period, the list of advertisers will include Red Bull, Jaguar and Comedy Central.
The company also noted that advertising will be followed by a subscription option for SoundCloud listeners who can pay for advertising-free experience. At the same time, no licensing deals with major labels have been revealed, although the rumors were that they were all in talks with SoundCloud to take stakes in the company and start getting royalties from streams. Apparently, the negotiations are still ongoing.
In the meantime, the industry observers admit that the move towards paying royalties is controversial for SoundCloud. On the one hand, it is good for artists to start getting paid for streams of their works, but on the other hand, the company’s advertising income may not be enough to cover large “advance” payments and per-stream payouts to the music labels.
In is unclear how (or even whether) advance payments to rightsholders are passed on to the musicians and songwriters. SoundCloud has an intention to pay all levels of the music industry, from the indie artists to the largest majors, two of which (Sony/ATV and BMG) are already the partners for the new advertising experiment.
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Sunday, August 24th, 2014
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