SoundCloud Starts Paid Subscription Version
March 29 2016 - 8:40AM
Dow Jones News
Audio-sharing platform SoundCloud on Tuesday will begin selling
paid subscriptions to one of the biggest music catalogs online, a
move that will test the willingness of young consumers to pay for
tunes from a service they're accustomed to using for free.
"SoundCloud Go," as the company's new paid tier is called, lets
users listen to music offline and without ads, and includes access
to the nearly 100 million mixes, mashups and other musical
creations by emerging artists and DJs for which the site is known,
in addition to the 30 million-song catalog owned by established
record companies and offered on other subscription services such as
Spotify.
It is the first service of its size to allow artists and labels
to control on a case-by-case basis what they put behind the
paywall—an ability that record companies have been pushing for in
recent years as they aim to maximize revenues amid declining CD and
download sales and streaming growth. Spotify so far has required
that all of the content on its paid service is also available to
its more than 80 million free users, who can't listen to songs on
demand but can play specific albums or artist catalogs on shuffle.
That stance has irked a litany of stars such as Taylor Swift, who
pulled all her music from Spotify in late 2014, and Gwen Stefani,
who is withholding her solo album, released March 18, from Spotify
until April 1.
Apple Inc.'s Apple Music, with about 12 million subscribers,
doesn't have a free tier, while Alphabet Inc.'s YouTube contains
all the same videos that paying YouTube Red subscribers can view
ad-free and offline.
To tempt free users to upgrade, SoundCloud's app highlights
paid-tier songs in red and offers 30-second previews of each. Users
can press buttons to unlock the songs by paying for a subscription,
which costs $10 a month for Android and web users and $13 a month
for iPhone and other Apple device users, because of the 30% fee
that Apple charges app makers for in-app purchases. Free users can
still add songs behind the paywall in snippet form to their
playlists, and share them with friends.
SoundCloud currently reaches about 175 million listeners each
month through its own mobile apps and sites as well as through
other channels such as social media. It counts tens of millions of
active monthly listeners, though it hasn't disclosed that number,
and it is especially popular with a young demographic, said
SoundCloud's co-founder and chief technology officer Eric
Wahlforss.
Berlin-based SoundCloud, founded in 2007, gained most of its
traction as a free site for emerging artists and DJs to share and
promote their music. The company started advertising two years ago
amid pressure from major record companies, who owned the rights to
some of the material being shared on the site without their
permission. It struck its first big licensing deal with Access
Industries' Warner Music Group in November and has since reached
agreements with Vivendi SA's Universal Music Group and Sony Corp.'s
Sony Music Entertainment as well. All three deals were signed on
the condition that SoundCloud would launch the paid service.
Mr. Wahlforss said that many of its users have been asking for
an ad-free, offline listening option, but he suspected the biggest
selling point might be "what they don't know that they want," the
ability to listen to all of their music in one place.
Pandora Media Inc. is planning to launch an on-demand, ad-free
tier later this year as well, betting that it can get at least 10%
of its roughly 80 million free Internet radio listeners to
subscribe.
Write to Hannah Karp at hannah.karp@wsj.com
(END) Dow Jones Newswires
March 29, 2016 09:25 ET (13:25 GMT)
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