Bloomberg: SoundCloud Nearing Copyright Deals With Major Record Labels

(RTTNews) - Music and audio-sharing company SoundCloud Ltd. is nearing copyright deals with major record labels in return for a small stake in the company and also a percentage of future revenues, according to a Bloomberg report on Thursday. The timings of the deals are expected to be different as some of the record labels are closer to a deal than some others.

Berlin-based SoundCloud is in talks with giant record labels such as Universal Music Group, Sony Music Entertainment and Warner Music Group for licenses to continue playing their songs on the popular music sharing platform and avoid potential legal disputes.

As a consideration for the license, the digital music service start-up is looking to give each record label a 3 to 5 percent stake in the company and a percentage of future revenues.

The proposed deals could value SoundCloud between $500 million and $600 million. The company is said to have been valued at about $700 million, based on an investment made in the company earlier in the year.

SoundCloud, with more than 250 million listeners a month, is an audio music sharing site like what Google, Inc.'s (GOOG) YouTube is for video. SoundCloud claims that 12 hours of audio is uploaded every minute. It is backed by venture capital companies including Institutional Venture Partners and Kleiner Perkins Caufield & Byers.

Known as the "YouTube for audio", the social sharing platform for audio enables users, from individuals to DJ collectives to bands, to upload, record, promote and share their audio clips. The music streaming service is primarily free, but it charges for premium subscriptions, those who upload more than two hours of audio a month.

SoundCloud was launched in October 2008 by Swedish sound designer Alexander Ljung and Swedish artist Eric Wahlforss. The audio platform gives users unprecedented access to a huge community of music and audio creators.

SoundCloud has in recent years become one of the most popular services for people to share music. However, when users upload music on the site it could be infringing copyrights. The major record labels still see online piracy as one of the main threats to their industry.

Meanwhile, SoundCloud has been offering unlimited removal powers to certain copyright holders without having any control over the process. It has granted them the power to delete any and all content they deem to be infringing copyright, without oversight.

In mid-May, there were reports that micro-blogging site Twitter, Inc. (TWTR) is in talks to acquire SoundCloud in a bid to expand its user base.

Other consumer technology companies too have either boosted or are trying to enhance their presence in the music industry.

Apple, Inc. (AAPL) in late May agreed to acquire high-end headphone maker and music-streaming service Beats Electronics LLC for $3 billion, as the iPhone maker seeks to spur its slowing growth.

Meanwhile, Facebook has integrated Spotify Ltd.'s music-streaming service into its social network to boost sharing.