SoundCloud and Universal Music Group (UMG) are reportedly close to signing a huge deal. The agreement will give UMG a percentage stake in SoundCloud as well as a large upfront payment, in exchange for allowing content by UMG artists to remain on the streaming service.
Tech Times has been reporting on the intense pressure SoundCloud has been receiving recently from major music labels Sony and UMG. The companies have both been threatening litigation if SoundCloud does not meet their terms for a licensing deal quickly. Sony has pulled and is continuing to remove an enormous amount of content from the service until a deal is reached with the label.
The third major label, Warner Music Group, has already inked a landmark licensing deal with SoundCloud that includes licensing rights for derivative works, which cover the numerous DJ mixes, mashups and remixes that populate the EDM (Electronic Dance Music) heavy SoundCloud streaming platform. WMG received up to a 5 percent stake in SoundCloud as part of the deal, which, unlike the approach taken by its Sony and UMG rivals, was brokered in a friendly fashion due to the presence of ex-WMG exec turned SoundCloud honcho Stephen Bryant.
According to the report, the UMG deal will give SoundCloud 18 months to implement a system that will instantly recognize songs and identify them so the appropriate rights holders can be paid accordingly.
SoundCloud was apparently pushing for a three-year time frame to develop the system, but UMG insisted the period be cut in half. Sony apparently thinks that time frame is still too long a delay, as the music identification technology already exists to a large degree. It seems crucial that Sony will ultimately be on board because, without the third and final major label, huge holes would exist in SoundCloud's platform, representing material by all the artists under the Sony umbrella.