SoundCloud is one of the oldest music services on the Web, but has not been loved by the music labels, due to its lacklustre control over users uploading mixes of popular songs, without giving revenue to the music label.
This has pushed most music labels away from working on SoundCloud, but the company might be looking to tie in the music labels, in return SoundCloud will beef up the organisation of their website.
Universal, Sony and Warner Music will each get a three to five percent stake in SoundCloud for the music labels deal. We are not sure how much revenue the music labels will get per track played, and if this rate will be competitive against Spotify.
Allowing record companies to pull down songs might be the end of the culture in SoundCloud, but most of the mixes of an official song go unheard. Some big mixers and podcasts might see the boot, but we are sure they will be able to make deals with the music labels.
This might open up a new SoundCloud library, full with official music. This would make SoundCloud a more competitive service against Spotify and Rdio, while continuing to pump out other types of audio.
SoundCloud is definitely a service music labels want to have a stake in, considering the recent report about Twitter preparing to acquire SoundCloud for around $1 billion. This might have been dropped, but it still opens up the possibility of an acquisition further down the line, for more money.
If SoundCloud can grab the three major labels, they could be in for another huge growth in the company. Alongside all the indie labels and audio blogs and podcasts, the vibrant life on SoundCloud and unique culture, it might bring other large companies like Facebook and Google onto the table, if SoundCloud want to be acquired.