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Soundcloud’s agreement with Sony highlights a forthcoming paid service

Streaming platform Souncloud is an artist community built off of free streaming. But with losses growing far greater than its income, its business model has become a primary focus.

Following a reached agreement between Soundcloud and Sony, a devolution of control will be handed over to large labels.

Streaming has become a dominant form of content consumption in the music industry – with 2015 seeing (for the first time ever) streaming as the largest revenue source. The industry is now laden in competition including Apple, Google/YouTube, Amazon, Tidal and Spotify, but Soundcloud will be the first service to offer labels the autonomy over which songs should be freely available.

Since November 2014, agreements have been signed with Warner Music Group, Universal and Merlin, and on March 18th signed a crucial agreement with Sony.

James Collinson, head of Ninja Tune North America says “The audience that is buying electronic albums and festival tickets is hanging out on SoundCloud. It’s an artist tool and an artist community.”
But convincing users who’ve previously enjoyed free content to start paying on a subscription basis will be the next big challenge. However even a 5 percent ­conversion rate from SoundCloud’s 175 million users (8.7 ­million) would give it a competitive edge.

[Via: Billboard]


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