Would Soundcloud’s Subscription Service Harm or Hurt Indie Artists

guy listening to music on headphonesLast week it was revealed that the online music streaming service Soundcloud resolved its issues with Sony Music Entertainment, and would again have access to content from the latter’s artists and musicians through a recent licensing deal. The two powerful entities sparred over a reported lack of proper compensation, similar to the issue many have cited with YouTube (to which Soundcloud has been compared). Yet, after other music labels Warner and Universal both signed licensing deals in support of Soundcloud, Sony added the final stamp of approval from the big three, for its estimated 18 million artists to be published on the site and mobile app. These deals, experts suggest, are a sign that Soundcloud is prepared to launch a subscription service, similar to the likes of Spotify, Pandora and Apple Music.

To a greater extent than those services, however, Soundcloud has been the platform of choice for indie artists to publish music. After all, Soundcloud is a low cost option with a large user base, and an easy-to-use, basic platform. Sign up is easy, accessible to nearly everyone, and very quickly musicians and bands could lend credibility to their music by placing it on the website to be shared elsewhere. Furthermore, Soundcloud offers a pro service for uploaders to track their fans and know where they resonate most–a benefit for artists interested in developing targeted strategies for marketing and/or touring.

Soundcloud is well aware of that status, and in early 2015, the service signed a deal with Merlin, a music rights agency for indie artists, which has a membership of over 20,000. Like the big three, Merlin’s members would not only receive exposure on Soundcloud, they would be paid for their streams as a part of the deal. Undeniably, this deal is huge plus for artists battling the decline of actual music purchases. However, for thousands of others who are not members of Merlin’s large network, who don’t have a recording contract, or are just starting out, what, exactly, could this deal mean for them?

On one hand, it’s possible that artists will be inspired to license their music to ensure payment of royalties on these services. That would be a win for all involved. But there is a possibility that such may not be even be an option, should users decide not to pay for the subscription to listen to the 100 million plus records on Soundcloud’s roster. In the most current details of the company’s plans, they would offer two tiers of paid service: one which allows users to access ad-free music with limited downloads, and the other which would include unlimited access to all content. These would exist alongside the service’s free option, for which there is no concrete information about how it would change.

The challenge is that most music lovers are still unwilling to pay for streamed music, which has been a major part of Soundcloud’s popularity. Take Pandora for instance, which has millions of users, but less than 5% who pay for the pro, ad-free service. Other streaming services have faced similar problems. Outside of Spotify, which has reached 25% paid users, similar services haven’t been able to compete on that level nor make the case for subscription. Perhaps Soundcloud will have similar success, though the market is crowded. Time will tell.