SoundCloud has followed Spotify, Apple Music, and others into the world of of subscription on-demand music this week, adding a $10/month subscription tier to its music streaming service. The news comes after the company’s recent partnership with Sony Music Entertainment — the last of the three major labels to give its blessing to the streamer — allowing SoundCloud to essentially go legit and sell a wide gamut of copyrighted music.
The new plan, called SoundCloud Go, gives users ad-free access to all of SoundCloud’s music and also allows users to listen offline from a catalog that offers around 100 million more songs than rivals Spotify and Apple Music. It also allows musicians to decide which cuts appear behind the paywall, accessible only by those who pay up. The new paid tier is currently only available in the United States.
Soundcloud currently boasts a massive 175 million users, and looks to continue that growth with the new paid tier. It’s a huge experiment — the company has always operated on a free model, and it remains to be seen just how many users will want to pony up hard-earned cash for the ad-free version.
The company says exclusive paid-tier content will fuel fans’ desire to pay, but Jay Z’s Tidal has had a difficult time gaining traction with that strategy. While Tidal has gained around 2.5 million users since re-launching last year — with a crowd of Jay Z’s superstar friends offering up exclusive titles — it has also undergone a litany of missteps along the way, including a real-life game of musical chairs from top executives in the front office.
And though SoundCloud’s large volume of music from creators big and small is impressive, many have been raising questions as to its legality. SoundCloud has long been host to user-created remixes, samples, and mashups of previously-published musical works, which makes distributing royalties properly a Herculean task.
The company has addressed those royalty concerns, claiming it has a system in place that will properly distribute the royalties owed. Speaking about its payment system, SoundCloud co-founder Alexander Ljung told Billboard, “We don’t go into the specifics of how it works, but we say it’s a framework for the entire industry. When you’re doing something at true Internet scale — millions and billions — what we’ve created works for most stuff.”
It helps that each of the three major labels who have signed on — Universal, Sony, and Warner — all took equity stakes in SoundCloud as part of their licensing deals. That means they each have a vested interest in mitigating lawsuits from outside parties for misplaced royalty payments.
And many others in the music world are pulling for SoundCloud Go to be successful, largely because of the crater it would leave in the streaming music infrastructure if it folded. No other streaming service offers what SoundCloud does. It serves as an essential tool for smaller artists and labels, allowing them to distribute music and generate income, and a lot of smaller musicians would simply not be heard without it. But the service has been hemorrhaging money in recent years, and desperately needs to create profits to stay in business long term.
With the three biggest major labels co-invested in its success, the new subscription service may be SoundCloud’s best bet to stick around for the long term. We’ll be following these events as they unfold, so stay with us.
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