The three major labels have taken a major interest in SoundCloud, but what's next for the Berlin-based website?
Berlin-based streaming service SoundCloud is about to reach a deal with the four major labels, which will allow its users to stream copyrighted music, according to Bloomberg. At the moment, it looks like three of the four major labels – Universal Music Group, Sony Music Entertainment and Warner Music Group are willing to waive any potential disputes in exchange for a stake in the startup. SoundCloud is negotiating with each label for a stake between 3 and 5 percent, as well as a cut of all future revenue, according to anonymous sources close to the talks.
The three companies are negotiating for different shares of the startup.
As for the company’s current worth, it’s been estimated at $500 to $600 million during the current round of negotiations. Earlier in the year, however, its value had been estimated at around $700 million, which could be due to the licensing deals being different than a traditional venture capital-like investment, per Bloomberg’s insider. So would this deal mean that Twitter isn't about to purchase SoundCloud, as previously rumours around the tech world suggested? The social media giant reportedly passed on a deal with SoundCloud back in May, but all the recent interests would suggest that the mainstream music industry has big plans for the growing musical platform.
If so, then we may be witnessing a repeat of the Great Google Purchase of Youtube in 2006 - or, more likely, an alternative scenario that the major labels would have liked to see. The companies' numerous copyright disputes with Youtube over the past eight years have been well documented.
There is still no official word on the negotiations or any pending deals from Soundcloud or the three labels. The companies are at different stages of negotiations. It is still unclear what changes, if any, the deal could bring for individual SoundCloud users.