SoundCloud,the digital playground for many music fans and creators, says it will start paying artists and record labels for the first time by incorporating advertising and doling out royalties.
The Berlin-based company, now six years old, boasts about 175 million unique visitors a month. SoundCloud is popular with hip hop and electronic dance music aficionados and musicians who can mix, share, re-mix and mash-up all kinds of music to create ever-changing works.
SoundCloud founder Alexander Ljung said artists will be able to decide which tracks the audio and display ads can appear on. At first, content only played in the US will be tabulated. It plans to later introduce a paid subscription model allowing listeners to skip ads.
The new program begins with 20 partners, which includes music publishers BMG and Sony/ATV, the comedy site Funny or Die and some independent artists. Advertisers include Comedy Central and Red Bull.
Jeff Toig, SoundCloud’s chief business officer, told The New York Times most of the revenue from advertising will be channelled to the content provider but did not go into details.
Up to now, revenues for the company – founded by Swedish engineers Ljung and Eric Wahlforss —- have been minimal. Its revenues came from fees it charged to its most active providers. The company had $13 million in revenue but $20 million in net losses in 2012 – the latest year the company’s filings have been made available.
SoundCloud is still in talks with other major labels for equity stakes in the company on the proviso the labels agree not to sue the digital space for past copyright infringements.