Leaked Contract Details Soundcloud’s Plans For Subscription Tier, Paying Labels

SoundCloud is trying to go legit—or at least get to a point where labels like Sony aren’t pulling their artists’ content from the platform. To that end, the company has apparently been negotiating with labels and working to make traditional money-making opportunities (in the form of advertisements and paid tiers) a formal part of the Soundcloud experience. An unsigned contract with independent music publishers leaked to the internet yesterday, outlining the terms of a possible deal.

The document proposes a three-tiered listening system. The “SoundCloud Full Catalog Subscription Service” would cover the most music and cost users the most. The “Additional Services” level would be a step down, less expensive—users would pay for the luxury of no advertisements, as they do on Spotify—but limited in scope. The third tier would remain free.

Labels would be paid based on a percentage of streaming revenue, a percentage of royalties, or a per-user fee—$.18 a month for each person who signs up for “Additional Services” and $0.80 a month for each “Full Catalog” user. In the same manner as the leaked contract between Sony and Spotify, this ensures that if streaming is poor for whatever reason, labels have an alternate source of income.

Soundcloud would pay the independent publishers $350,000 in advance and offer them a “Most Favored Nation Clause.” This appeared in the Spotify/Sony deal as well: it means that if Soundcloud entered into a better deal with the major labels, these publishers would be able to get the same favorable terms.

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