Vivendi's Universal Music Group Agrees to License Some Music to SoundCloud
January 13 2016 - 9:29AM
Dow Jones News
By Hannah Karp
Vivendi SA's Universal Music Group has agreed to license some of
its music to SoundCloud, allowing the world's largest music company
to collect revenue from the popular audio-sharing platform.
Their deal comes more than a year after Access Industries'
Warner Music Group became the first major record company to enter
into a similar agreement with the German music-streaming service.
The licensing deals emphasize the importance of SoundCloud as a
marketing tool for record labels, despite their growing frustration
with the paltry revenue that ad-supported music platforms have
generated for them relative to the amount of music consumed on such
free sites.
In October 2014, shortly before Warner Music signed its deal
with SoundCloud, Universal Music Chairman Lucian Grainge said at
The Wall Street Journal's WSJD Live technology conference that he
still needed to hear what SoundCloud's "business plan is going to
be."
Universal decided to work with SoundCloud after watching the
company sharpen its advertising strategy, hire ad-sales teams and
reiterate its earlier promises to launch a paid subscription
service in addition to its free site, according to a person
familiar with the matter. SoundCloud had also promised Warner Music
it would launch a paid offering.
Universal's deal allows it to control what music it makes
available on the free platform, and to adjust the lengths of the
snippets of songs that users can share with friends on social
media, this person said.
Universal's labels and publishing company will also get access
to SoundCloud's "promotional tools, analysis and data to provide
recording artists and songwriters with new opportunities to
generate revenue and to strengthen their connections with fans,"
the companies said in a joint statement. Terms weren't
disclosed.
Sony Corp.'s Sony Music Entertainment has also been in licensing
negotiations with SoundCloud but hasn't reached a deal, removing
music by some of its most popular artists from the site last
year.
SoundCloud started carrying advertising on its site in 2014 and
began sharing the ad revenue with partners that range from
individual artists to independent labels.
The company counts roughly 175 million monthly listeners, more
than double the size of Pandora Media Inc.'s active monthly user
base and roughly double the size of Spotify AB's free user
base.
Write to Hannah Karp at hannah.karp@wsj.com
(END) Dow Jones Newswires
January 13, 2016 09:14 ET (14:14 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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