SoundCloud launches a paid music streaming service to compete with Spotify and Apple Music
The music and audio streaming firm SoundCloud is launching its long-planned subscription service, but for now the $9.99-a-month service will only be available in the US.
The new feature, SoundCloud Go, is being launched on Tuesday, and the company hopes a mammoth catalogue of more than 125m tracks – quadruple those of its rivals Spotify and Apple Music – will persuade a chunk of its 175 million subscribers who listen for free to start paying.
SoundCloud has been talking about its plans to launch a subscription service for the past two years, during drawn-out licensing negotiations with music rights holders. The company has agreed deals with all three major labels, the indie-label licensing agency Merlin, and various music publishers.
SoundCloud’s co-founder, Eric Wahlforss, told the Guardian before the launch: “These deals are very special. They’re bespoke in nature and they allow us to do some pretty cool things.
“We’re going to have over 125m tracks on the platform– a lot of emerging and indie artists, major artists and also DJs, remixers and mash-ups – and another bunch of millions of tracks coming straight from the major labels.”
These are SoundCloud’s first licensing deals, as its free service has relied on “safe harbour” legislation under which it promised to remove copyrighted tracks if notified by their rightsholders.
SoundCloud has been under pressure to agree licensing deals for a paid subscription service, with music industry bodies the IFPI, BPI and RIAA frequently criticising the way safe harbour enabled SoundCloud to grow without licences. Now, with deals in place, Wahlforss said SoundCloud sees its combination of popular tracks and rare or unreleased music will help it to stand out in the music-streaming space.
“You’ll get an emerging artist that just started making music a year or two ago and now has traction on SoundCloud, next to Adele, next to John Lennon, next to an hour-long DJ set, next to a mash-up – all of that in one place,” he said.
SoundCloud Go, which will be more expensive on iOS devices at $12.99 a month to factor in Apple’s 30% share of in-app purchases, will also enable its users to store tracks on their devices for offline listening. Labels will be able to decide whether to make their music available on SoundCloud’s free service, its subscription tier or both. Spotify’s past unwillingness to allow such a choice led to its infamous dispute with Taylor Swift, who removed all her music from Spotify as a result.
“We’re going to have a lot of Taylor Swift’s catalogue,” said Wahlforss. “Rightsholders can strike a balance between the promotional aspects of SoundCloud, and monetising the music.”
Although SoundCloud Go is only launching in the US, Wahlforss said the company’s label deals were global in nature, meaning that it only needs to strike publishing-rights agreements with collecting societies elsewhere in the world before expanding.
SoundCloud agreed a deal with British society PRS for Music in December 2015 – in the process, settling a lawsuit launched by the latter a few months earlier – which may lead to the UK being one of the first non-US countries to get SoundCloud Go.
SoundCloud has plenty of catching up to do with its rivals. Spotify recently reached 30 million paying subscribers, while Apple Music reached 11 million in February.
The company and its investors will be hoping that SoundCloud Go can boost its financial performance. In its last public set of financial results for 2014, SoundCloud’s revenues grew by 54% to €17.4m, but its losses increased by 69% to €39.1m. SoundCloud has raised £111m in funding since 2009, including a £24.5m round of debt financing in early 2016.
Wahlforss was certainly was not shy of talking up SoundCloud Go’s prospects. “This might be the most ultimate music streaming service that has ever existed,” he said.