Soundcloud Braced For Massive Legal Bills

The end is nigh…! Or is it?

According to Digital Music News, Soundcloud is about to be hit with a potentially site-slaying tsunami of copyright lawsuits from Universal Music Group, Sony and the Recording Industry Association of America (RIAA). The music sharing website has been thrashing out the details of launching an ad funded service with major label backing, but, after negotiating a deal with Warner, has apparently hit a brick wall with UMG and Sony. 

From DNM:

“They don’t like SoundCloud’s attitude, they don’t like the pace of the talks,” one source flatly told DMN, with particular reference to SoundCloud’s CEO, Alexander Ljung.

“I’m not saying this is another ‘legal jihad,’ but lawsuits will be filed.”

… One issue is Ljung’s insistence on maintaining a free tier, similar to the ‘freemium funnel’ created by Spotify.  “There are 3 billion people online, you’re never going to all get those into subscription, it’s just not going happen,” Ljung flatly stated recently at Midem.  “Some people will come through ads, some through subscription.”

“That’s why I’m choosing to have both.”

"But from the standpoint of mega-labels like UMG, that’s not necessarily his choice to make.   And neither are the terms of their contracts."

At first appearence this looks very much like another case of major labels refusing to accept the changing listening habits of a new generation – whilst UMG, RIAA and Sony could easily decimate Soundcloud with lawsuits – and quite possibly will – it will simply push the producers who use the community to another site, and increase the general mistrust consumers feel for major labels.

However, Billboard has reported the story somewhat differently, announcing that –

"sources with knowledge of the situation at Sony Music and Universal Music Group say they have no knowledge of any imminent litigation against SoundCloud. While Warner Music Group  did not respond to a request for comment, its unlikely the label would sue a company it has fully licensed.

As well, the RIAA does not undertake legal action without unanimity among its members, which WMG's agreement with SoundCloud would preclude."

So who to believe? Either which way, Soundcloud is definitely changing. Whatever happens, we suggest you start backing up your sounds, y'know, just in case.