This Is the Contract SoundCloud Is About to Sign With Music Publishers…

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    by Paul Resnikoff

    SoundCloud has over 175 million unique users, 40 million of them registered, with over 12 hours of audio content uploaded every minute.

    Which might explain why major labels and publishers are very serious about either (a) licensing SoundCloud legitimately; or (b) shutting down the free ride.

    But major labels and publishers aren’t the only ones structuring agreements: independents are also jockeying for proper terms, and banding together to make sure they receive similar, equitable terms.  Which brings us to the following, near-complete agreement between independent music publishers and SoundCloud, complete with Most Favored Nations (MFN) stipulations to protect their cut.

    This isn’t the final, signed contract, but it’s pretty close and slated for signatures this month.

    The agreement includes advances to participating publishers, similar to advances being structured between major labels and Spotify but on a far smaller scale.  Those advances create some sticky potential issues with songwriters, including the possibility of not getting paid.

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    These advances are smaller (around $350,000) and ‘recoupable,’ meaning that Soundcloud starts paying proper royalties after the advance watermark is met.

    The SoundCloud music publishing agreement, brokered through the National Music Publishers Association (NMPA), is happening alongside negotiations with major labels Warner Music Group, Sony Music Entertainment, and Universal Music Group, not to mention major publishers like Sony/ATV, Warner Chappell, and Universal Music Group Publishing.  It also includes a substantial ‘freemium’ component (ie, free content access instead of a hard paywall).

    SoundCloud has indicated that it will definitely not be abandoning its free tier.