The new deal is an important step towards the company’s upcoming paid subscription service, which is rumored to hit the public by the end of the year.
Similar to SoundCloud’s deals with Universal Warner, Sony received an undisclosed amount of equity in the deal, giving it a vested interest in SoundCloud’s success.
SoundCloud has been maligned by financial issues of late, and will need serious capital investment in order to stay solvent long term. The company, which provides free streaming to many of the world’s independent artists, is an essential tool in the 21st century music world, and there would be a serious vacuum in multiple genres if it were to fail.
Sony pulled all of its music from the service last year out of frustration from a “lack of monetization options,” according to Billboard. But with a paid subscription service pending, the company likely wants piece of the pie if it proves successful.
For SoundCloud, which boasts around 175 million users a month, a paid model seems to be the only path to a self-sustaining future. That said, implementing it in a way that doesn’t damage its user base might prove tricky. The company reportedly plans to charge $10 per month for the forthcoming paid service, but because all of its users currently enjoy all of SoundCloud’s features for free — and advertisements are minimal — there’s a real question lingering about just what the company will bring to the table to entice users to pay.
That said, if the paid model fails and SoundCloud needs more capital investment, it might not get it. Still, now isn’t the time to panic; With all three major labels co-invested, SoundCloud could be poised to pull off a hail Mary, provided implementation hits the mark.
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