SoundCloud and Sony Music have finally reached an agreement. The music label has agreed to terms with the streaming service, which reportedly includes a percentage stake in the company, to license music by Sony artists for use on the SoundCloud platform, paving the way for a subscription service set to debut sometime later this year.
The two companies have been at odds for quite some time, and things got heated last year when Sony began demanding that material by its artists be removed from SoundCloud's catalogue.
A deal between the two parties has been viewed as crucial to the streaming platform in order for it to continue operating legally and, eventually, profitably, with the launch of a subscription service in the cards.
SoundCloud had already inked similar deals with the other two major music labels, Warner Music Group (WMG) and Universal Music Group (UMG). Warner was the first and easiest to line up due to the presence of a former top WMG exec in the top ranks at SoundCloud, who facilitated the deal, which included a reported 5 percent stake in the streamer. Negotiations with UMG were much more contentious, with the label threatening litigation against SoundCloud if it didn't meet its deadline for an agreement.
When UMG finally signed on in January of this year, reportedly also with a percentage stake in SoundCloud included in the deal, it was Sony who remained the last holdout of the three major labels and also the last impediment to the launch of a subscription service for the company.
The subscription model is crucial for SoundCloud, which has not reached profitability and has not yet figured out a way to properly monetize its huge user base, which has grown exponentially in the past few years.
"Today is of particular significance to us as a company, as the addition of SME [Sony Music Entertainment] means we now have deals in place with all of the major music labels." SoundCloud Founder and CEO Alexander Ljung said.
The question now is what the new subscription model will look like and if it will actually allow SoundCloud to function as it has been while potentially earning a profit, part of which will now be shared with its three music label partners, Warner, Universal, and now, Sony.