There have been signs that are pointing to SoundCloud that it will eventually become a pay service for a while. Major labels and copyright owners have been taking down music from all over the website. Without any reliable stream of audio, fans will stop clicking. To ensure the flow will continue, SoundCloud would have to meet labels’ interests, and then begin to monetize their services. Ads have already been a part of the music-hosting website’s model, and now a leaked contract between SoundCloud and the National Music Publishers’ Association has showed more details on the subscription packages.
The contract, which consists of 19 pages and can be seen below, and is the takeaway that SoundCloud is working on a three-tier system. At the bottom is the free, ad-based service that will allow users to have limited access to the catalog on the sight. Next would an “Additional Services” level, which would remove ads and add more of the catalog, but not all of it. In order to have full access to SoundCloud’s audio, you would need to get the “Full Catalog Subscription Service”.
For how this will mean in terms of money for the labels, TechCrunch says that the companies will be owed 10.5% of all revenue from subscriptions and ads, or almost 22% of what would be earned through any recording rights that are owned by SoundCloud, whichever will be higher. There is a clause that states that the labels could take $0.18 from each Additional Services user and/or $.80 from Full Catalog Subscription Service subscriber if that would get the labels more than the 10.5% or 22% payouts.
“Most Favored Nation” clause as well that would make sure hat independent labels get equal compensation to deal cuts with larger labels after market shares are accounted for. SoundCloud also has offered an advance of $350,000 to every independent label and publisher.
The contract is currently unsigned, so it is unknown if this is the actual deal NMPA agreed to last month. It is obvious that if listeners want to continue using SoundCloud’s full potential, they will have to start paying up the money.