Soundcloud is close to agreeing on a new licensing deal with Universal Music Group that will allow UMG significant equity in the streaming service. Sources report that Soundcloud has been chasing a significant equity stake in the streaming service in exchange for licensing rights as well as guarantees on a future subscription-based tier.
The news arrives right after reports began to grow about SoundCloud going down since they have been using new business models and suspending lots of accounts. They have been trying to be a bit more successful since signing the royalty deal with 20,000 indie labels earlier this summer.
A MBW source explained:
“Universal had a couple of aggressive choices: they could either sue SoundCloud, which wasn’t off the table, or refuse to play ball with them and watch them slide out of existence as money ran low. But Universal knows that a world with a SoundCloud that it can control is better than a world without SoundCloud full stop – especially if that leads to a hundred clones popping up online.”
Once the deal is final, UMG will be the second major music group to come up with an agreement with SoundCloud. The first was Warner Music Group who signed a similar agreement back in November, and granted the label a five percent stake in the company.