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SoundCloud signs Merlin deal to pay indie labels for music streams


On song: the future looks very bright for SoundCloud

On song: the future looks very bright for SoundCloud

Getty Images/iStockphoto

On song: the future looks very bright for SoundCloud

With its latest music industry link-up and rumours of a subscription service, SoundCloud is heading for the big time. But, asks Katie Wright, can the home of hipster sounds compete with Apple and Spotify?

SoundCloud.com started life as an unlicensed free music service, where indie music obsessives went to find mixtapes from their favourite DJs and upload remixes of their own. Now, five years on, the site's latest announcement shows it's inching ever closer to the mainstream

Following previous agreements last year with Warner Music Group and the National Music Publishers' Association, SoundCloud has announced a licensing deal with Merlin, the agency that represents more than 20,000 independent labels.

Merlin is the newest addition to the confusingly titled On SoundCloud, the initiative that pays advertising revenue to artists, presumably allocated per song play (but the exact terms haven't been revealed).

Clearly, SoundCloud wants to leverage its discerning fanbase, largely comprised of hipsters who love nothing more than staking claim on an unknown band before they hit the charts and become mainstream.

"We've been a very powerful, very crucial tool for the indie community for a long time," says CEO Alexander Ljung. "We built a lot of great tools for those creators to use the web and a lot of great ways to reach an audience.

"But we've really been longing to enable them to be able to make some money off of their music."

Before, the site was seen as a listening-post, much like YouTube, a way to promote artists in the hope it would generate album and gig ticket sales elsewhere, but that's set to change.

In the wake of the Merlin deal, a leaked proposal document has surfaced suggesting SoundCloud will also soon be offering a subscription service. The leak comes just days after Apple revealed its own streaming app is almost ready for rollout. But can SoundCloud really hope to compete with Apple Music and Spotify? Actually, it can. The site has 175 million users, far outstripping Spotify's 75 million (of which 20 million pay monthly). If SoundCloud can manage to attract a similar percentage of paying users, they're looking at north of 45 million sign-ups.

Now there is a chance their users aren't the buying types, preferring to seek out new tracks then download them illegally, but even if that's the case for some, SoundCloud is still in a very strong position.

Apple and Spotify had better watch their backs, with powerful SoundCloud on the horizon.