SoundCloud inks first major label deal with Warner Music Group

soundcloud-logo canvasAfter a bobble in negotiations last month, SoundCloud and Warner Music Group have signed a licensing deal. “The deal includes innovative licensing terms that will provide WMG and its artists greater ability to manage the availability of content, while providing a path towards delivering additional revenue from user-generated mixes and mash-ups of WMG music,” SoundCloud said.

According to the terms of the deal, SoundCloud will pay royalties to Warner whenever one of its songs are played on its ad-supported platform as well as giving a cut of its advertising revenue to the label. The Wall Street Journal reported that Warner will have a 3-5% stake in the online music platform.

Warner will also receive royalties from a subscription service SoundCloud is reportedly developing. SoundCloud CEO Alexander Ljung said the subscription plan is slated to launch in the first half of 2015.

WSJ reported that a guaranteed lauch for that subscription service may have been crucial in securing Warner’s end of the deal. Recognizing the role of mash-ups and remixes in the SoundCloud ecosystem was probably important as well, since that is one of the platform’s unique features that sets the company apart from its competitors.

Anna Washenko