Ever since 2007, SoundCloud has been revolutionizing the way artists and fans share music online. Before it, there were few easy ways for music bloggers to embed listenable tracks on their sites and share new underground music with their followers. Most notably, SoundCloud helped spur on the movement in Electronic Dance Music (EDM) and the DJs that make it.
SoundCloud is now the defacto YouTube of underground music, and just like the video behemoth, the music platform is undergoing some very public growing pains as it tries to keep the record labels, the artists, and the fans all happy —especially when it comes music copyrights.
With over 40 million registered users and over 250 million listeners, SoundCloud is now too large to have human employees supervising, flagging or removing the millions of songs that get uploaded, sometimes illegally, on a daily basis. A simple solution was to introduce its platform to Audible Magic, a technology that identifies and automatically removes unlicensed songs uploaded by users that infringe on the copyright held by record labels. Essentially, Audible Magic can identify the “acoustic fingerprint” left on a piece of audio and quickly know if it’s copyrighted content.
However, there was a tiny caveat with the implementation of Audible Magic. As stated earlier, SoundCloud has always been a hub for Electronic Dance Music (EDM) artists and DJ’s and thus, the millions of fans the genre has ignited. But herein lies the problem: the genre is flooded with “unlicensed” mash-ups, mixes, and collaborations—music that producers and DJ’s create casually in the studio.
But because of SoundCloud’s new strict copyright rules and ruthless scanning technology, these unlicensed sessions violate their Terms of Service and can no longer be hosted on the platform, as one EDM heavyweight discovered the hard way.
DJs Begin Their Protest
On June 4, house music DJ Kaskade went on a public tirade against SoundCloud after the platform took down 70% of his catalogue, even official tracks that had actually been licensed, but to his former record label rather than his current one. On his Tumblr, he called SoundCloud’s practices “out of touch” and “irrelevant.” He also referred to Audible Magic as a “soulless robot program.” Kaskade was so displeased with the platform that he vowed to start his own music sharing service. A few weeks later, he uploaded his most recent album, Atmosphere, entirely on YouTube. If it hadn’t been for the screw-up, perhaps fans would be listening to the Kaskade album on SoundCloud.
It didn’t just happen to Kaskade though. EDM artists all over the country have felt the wrath of SoundCloud’s takedowns, pressured to remove whatever copyright-contentious tracks they have before getting their entire account deleted.
“What is bothering me the most is SoundCloud neglecting the community that put them in the position they’re in and essentially built them into what they are now,” producer Lakim told Vice.
As for SoundCloud, they remain committed to trying to keep both the record labels and the artists happy. Their official press statement on the manner is as follows:
“As a responsible hosting platform, we work hard to ensure that everyone’s rights are respected. In the case of rights holders, that means having processes in place to ensure that any content posted without authorization is removed quickly and efficiently, and in the case of users, that means having separate processes in place to ensure that any content removed in error can be reinstated equally quickly. We cannot comment on specific cases or specific rights holders, but we apply our processes consistently and fairly—if any user believes that content has been removed in error—for example, because they had the necessary permissions from a label and/or any other rights holder—then they are free to dispute the takedown.”
Fellow EDM artist and SoundCloud user DJ Nappy has also experienced SoundCloud’s takedowns and calls the process of clearing wrongly flagged tracks “incredibly easy.” He writes on Do Androids Dance that if artists have permission to upload a song, SoundCloud support usually can settle the dispute within 24 hours.
Despite SoundCloud’s best intentions, however, music industry insiders say that the Audible Magic fiasco is creating a “user attrition” problem for the platform—one of the main reasons why Twitter backed out of an acquisition deal earlier this summer.
“Audible Magic… isn’t perfect and many times users are directed to take down their own compositions,” writes Bob Owsinski in Forbes. “No one wants the hassle of having to defend their own material, and the three strikes and your account is cancelled policy forces many users to make the decision to jump to another service… like MixCloud, MixCrate and Play.fm.”
SoundCloud is Playing in the Big Leagues Now
SoundCloud’s very public purge of copyrighted material might not be the only way it’s avoiding getting sued by the record labels. According to Bloomberg, the platform is negotiating giving Universal Music Group, Sony Music Entertainment and Warner Music Group a stake in the private company to continue playing the labels’ catalogues without legal disputes over copyright violations.
If the talks are successful, each record label is rumored to receive anywhere between a three and five percent stake, as well as a percentage of future revenue.
The deal would follow suit for the three major record labels, which have invested in similar digital music portals throughout the years. The largest, Universal Music, holds a five percent stake in Spotify and a 47 percent stake in Vevo. It also held a 14 percent stake in Beats Electronics before Apple acquired it. Warner Music also holds stake in Spotify, and all three labels held a stake in YouTube before Google acquired it.
This deal might be a mutually beneficial for both SoundCloud and the record labels. To this day, the labels use SoundCloud for promoting new music to the platform’s 250 million listeners. Holding a stake in the company would guarantee them access to these fans, as well as more control and information on how their music is consumed, distributed and shared.
In addition, SoundCloud recently hired Stephen Bryan, a former Warner Bros. digital business exec, to head the startup’s business development and strategy. Recode notes that bringing Bryan onboard could help SoundCloud create a bridge between the startup and the record labels, one that would eventually facilitate for revenue-sharing deals.
However, these deals will only affect artists who are signed to either Universal, Sony or Warner records, guaranteeing that their music gets hosted on SoundCloud. Indie artists and DJ’s will still be susceptible to Audible Magic, especially if they sample songs licensed to the major record labels.
If SoundCloud really is looking to create a protected environment for artists and users alike, they would be looking to negotiate with the record labels in a fair way that handles user-created mashups and “unlicensed” collaborations taken from their official catalogue. But as of now, that still seems to be up in the air.
Another scenario that might play out in the proposed SoundCloud partnership is how interested the record labels will undoubtedly be in immediately monetizing the platform. So far, SoundCloud has aimed towards more of a YouTube business model, as supposed to subscription-based Spotify. So don’t expect subscription plans anytime soon, but you pre-roll audio ads could very well be in the future of SoundCloud.
Furthermore, if record labels begin seeing SoundCloud as an official marketing channel, more artists will be tasked with creating and promoting their presence on the platform. In the end, Kaskade might not have a choice. But regardless of if or when the deals will be inked, it’s already looking like a identity-defining summer for SoundCloud. Only time will tell if it can live up to the YouTube comparison, or if it will go the way of Napster and implode.