Berlin-based music startup, Soundcloud, has announced a licensing deal with Universal Music just days after reports from Swedish website, DiGITAL, disclosed that the popular music service borrowed roughly $35 Million in debt loans from Tennenbaum Capital Partners. Their deal with Universal Music marked the second major record label signing for SoundCloud, following their 2014 deal with Warner Music Group.
Soundcloud has been working hard to strike deals with major record labels, in an effort to protect themselves from being hit with any copyright lawsuits (like the one they received from PRS last year).
While it might seem like SoundCloud’s $35 Million was to finalize the deal with Universal Music, it became clear to me in my recent interview with Megan West, SoundCloud’s Head of Content Relations, that the company’s goal since 2014 has been to offer more services to content creators who upload audio to the website. So, whether or not the money was used to pay for the Universal deal or not will probably never be known, seeing as SoundCloud has been pretty tight lipped about their movements since The Wall Street Journal reported that the streaming site was raising $150 million in venture capital at the end of 2014.
The question is, once SoundCloud strikes up a deal with the last of the “Big 3″major record companies – Sony Music Entertainment – will the ‘Cloud’ be launching a premium paid own consumer streaming service similar to that of Apple, Pandora, and Spotify? If so, will their model be better than the streaming sites who are currently growing their paid subscriptions?
SoundCloud’s current user base is in the range of 175 million people, uploading approximately 12 hours worth of audio every minute, according to Bloomberg.