Is Soundcloud planning to require all users to pay for a subscription?
Last month, leaked documents revealed that the music distribution platform SoundCloud has plans to join Apple Music, Tidal, Spotify and the others to feature its own multitiered subscription service.
SoundCloud co-founder and CTO Eric Wahlforss has officially confirmed these rumors, revealing that the platform will launch its subscription service later this year.
Known as the “YouTube for music,” SoundCloud lets members upload audio files that can be streamed by other listeners for no cost. The online audio distribution platform also lets users download tracks and mixes for free as well.
This current model has caused some record labels to criticize the platform for not properly paying royalties to artists and their labels. However, according to an unsigned contract between SoundCloud and the National Music Publishers’ Association that leaked in June, the Berlin-based startup is attempting to make itself more legit by agreeing to pay 10.5 percent of its revenue, including ads, or approximately 22 percent of what it makes on rights.
The leaked contracts also said that labels could then take extra royalties from its two-tier planned subscription service.
While Wahlforss refused to give up any details of the subscription service, according to the leak, the first tier would provide an ad-free experience for subscribers, with the ability to listen to audio and download a limited amount of music.
The second tier, dubbed “SoundCloud Full Catalog Subscription Service,” would then give subscribers the ability to have unlimited access to its music.
Labels would make an extra 18 cents each month on each user with the first tier model if the user base is higher than the revenue or sound recording rights, and an extra 80 cents for the full catalog option.
SoundCloud has more than 100 million tracks, and is especially popular among the electronic dance music genre since many DJs are known to release mixes on this platform. In comparison, Spotify has just over 30 million songs, and Tidal has 30 million songs and 75,000 high-quality videos.
Adding a subscription service would not only remove the music streaming platform from the legal gray area it lies in, but it will also provide a third stream of revenue. As of now, SoundCloud makes money from artists who pay for the premium version that includes extra features like additional stats, along with advertisements in the U.S.