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bowie

Since the summer (or earlier), you’ve been hearing that online streaming service SoundCloud would partner with big content makers. But noticeably absent was any official announcement of a label.

Well, a huge chunk of that picture just came together. SoundCloud and Warner Music Group today announced that they had inked a new partnership. The WMG announcement is huge – the global music conglomerate is just shy of 42% of worldwide market share. They’re the major among majors, the biggest US label, and the biggest publisher.

Oddly, many in the press jumped the gun on this announcement, claiming Warner had made a deal with SoundCloud before it evidently actually happened. But this is that deal, and it has big implications.

And if you think you don’t listen to Warner Music Group releases, you either have extraordinarily obscure tastes, or you’re just wrong. Their labels range from Nonesuch to Atlantic to Rhino, apart from things with “Warner” in them. (Full list below.) It even includes the Bowie record above – I know; it was the top hit on Rhino’s site today.

There were actually two announcements today. We knew as of summer that SoundCloud planned a subscription service not only for people uploading music, but those who just want to listen ad-free as advertisements start to appear on the service. But we only know now when that will happen – in the “first half of 2015.” Now, SoundCloud not only confirmed that subscription to CDM at the time, but also told us that they were investigating the ability for paid upload subscribers (like you, probably) to avoid ads. No additional information is available on that yet, but I don’t think there’s yet reason for panic – there just aren’t a lot of ads on the service yet to want to avoid.

So, what does this mean?

On_SoundCloud

For Warner and its artists (who I’m certain include some CDM readers), the answer is money – at least in some quantity. On SoundCloud‘s Premiere level, currently available only to select partners, offers money via advertising revenue for those who want to ad advertisements to their stream. It should also offer revenue via subscription services. There are a lot of unknowns here. To be successful, SoundCloud must find advertisers wanting to pay, listeners willing to listen, and by next year, subscribers willing to pay not to hear the ads.

What the deal offers for the moment is content – potentially, a lot of it.

It’s up to Warner to choose what content is available out of its catalog. SoundCloud tells CDM that Warner gets to choose which tracks are available, in exchange for revenue on the ad-supported free service as well as next year’s planned subscription service.

soundcloudscreen

Here’s the significant twist: if you’re a Warner-recorded artist or Warner/Chappell-published music author, you will get license fees out of the deal. And what’s unclear is what will happen to, say, DJs uploading music or remix artists. From a control standpoint, you might not want that content uploaded. On the other hand, SoundCloud is licensed, so all those plays would mean revenue. So while SoundCloud isn’t commenting on the terms, and this lies in the hands of Warner (and in Warner’s hands if you happen to be a Warner artist), we’ll see if this means a shift from uploads being taken down or blocked to having them left there, instead.

But I think the most significant information is this: read the full list of who Warner represents:

Asylum, Atlantic, Big Beat, East West, Elektra, Fueled by Ramen, Nonesuch, Parlophone, Reprise, Rhino, Roadrunner, Rykodisc, Sire, Warner Bros., Warner Classics, Warner Music Nashville, and Word, as well as Warner/Chappell Music

That’s a lot of music. And that means SoundCloud is now in the big league for the first time since its launch. Whether they can win in the big league, that’s another story – whether they’re another Spotify, or just another wannabe.

Warner Music Group and SoundCloud Announce Groundbreaking Partnership [WMG announcement]

Previously:
SoundCloud Explains Their New Plans to Us – And How Ads Will Work

Meet Those SoundCloud Premier Partners, Advertisers – And Look Back 5 Years Ago

Addendum: What to watch for

I think there may be some misunderstandings about my position here. Let me sum it up: through this licensing deal, Warner can put an enormous amount of music online – like a ridiculous amount. Check the artist list for Nonesuch alone.

But as we’ve learned again and again in the history of the Internet, having the license deal and access to the music sometimes amounts to absolutely nothing. You have to take that music and connect it to listeners.

The usual questions apply:

1. What will Warner’s music “On SoundCloud” look like that would make people look for it there instead of on YouTube or Spotify or iTunes?

2. What will the content channels even look like; what’s unique to SoundCloud as a format?

3. As I mentioned before, does this mean that existing artists adding Warner-owned content to DJ mixes and remixes will be able to upload it freely – with license fees trickling to the audiences?

These are huge questions, because SoundCloud will need to use the content to attract listeners, and then use those listeners to attract advertisers, then attract still more listeners who want to pay to avoid ads.

So, even as some hot-headed SoundCloud users gripe about ads on their service or the presence of a major label, that really isn’t the problem. The problem is that the whole deal could turn out to be irrelevant if SoundCloud can’t leverage what it just got – and that could mean business troubles ahead for the service. So that’s what we’re looking for; it’s just too early to say.