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April 23, 2024

SoundCloud announces plans to introduce advertising

By ALEX HUROWITZ | September 4, 2014

SoundCloud, the Germany-based online audio distribution platform, recently announced plans to introduce advertising to its website, with users being able to collect royalties as a result of such changes. To avoid any ads, one would be able to sign up for a premium account, which involves monthly payments.

This move seems to be a part of a new licensing deal that SoundCloud has signed with a number of entertainment companies, including some of the larger music publishing companies like Sony/ATV and BMG. Recent talks with major labels, such as Universal and Warner, have not produced any deals yet, but decisions and news of this sort show the direction the company is taking.

The success of SoundCloud, formed in 2007, was based on the very thing that the major record companies have been fighting and struggling with for years: easy and free access to music.

The internet has made it extremely easy to find, listen to and acquire new music, in addition to publishing and creating your own material. Poor album sales over time reflect how terribly the record industry has attempted to adapt to this new business environment created by the internet.

Wasting its time on harshly punishing consumers for file sharing and piracy, and on finding ways to increase their profits as they ignore the need to better support their artists, the record industry is in desperate need of internal repair.

Recent reports state that the 3.97 million albums that were sold across the country over the past seven days is the smallest weekly sum since 1991, when the Nielsen SoundScan first even started tracking that data.

Additionally, information over the past financial quarters show a significant downward decline, dropping from averages of 4.75 million units in the first quarter to 4.55 million units in the second quarter, to 4.2 million in the first eight weeks of the present third quarter.

SoundCloud, being one of the many things that the record industry sees as a source of its financial woes, is implementing this ad service in order to avoid any potential lawsuits with the major recording companies.

Generating profits to pay for royalties is definitely an attempt to placate the major labels, as well as joining the ranks of streaming companies like Spotify, which are trying to further legitimize the relatively new business of music streaming.

However, this sluggish attempt by the recording industry in profiting off of online streaming is still not going to directly benefit the artists. Many artists, including Thom Yorke of Radiohead and Damon Krakowski of Galaxie 500, have complained about how little the streaming companies actually pay the artists.

As of now, Spotify only gives around half a cent per listen, while Pandora pays less than a third of a cent. However, most of these royalties still go straight to the label, with the artists receiving a small cut as divided up by the label.

In the end, only the major labels acquire a significant amount of money from these services, as indie labels and artists struggle to get much of anything. There isn’t much proof to show SoundCloud will not do the same, promoting this unfortunate trend.

As a consumer, these events are putting us into a more uncomfortable position; even if one puts up with the annoyance of ads and having to pay money to avoid them, the artist still is not being supported effectively.

This is still lining the pockets of business bureaucrats who have not created anything nor done much to improve or provide better access to music.

While one can’t have as much influence as desired as a consumer on the decisions made by large corporate entities, there are still some “proactive” things you can do.

Whether or not you stream music for free or you pay, do not forget to actually purchase an album or song, digitally or physically, once in a while; it doesn’t hurt to own something you’ve listened to countless times.

Go to concerts. Buy merchandise at said shows. Tell your friends about your favorite bands and musicians and drag them along to their shows. Hear the music that your friends enjoy… This is not new information, but is probably the most efficient way one can support the artists as the recording industry fails to do so.

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