SoundCloud made one of its biggest and most exciting announcements this week. The German streaming platform has solidified a licensing deal with Universal Music Group, one of the largest music corporations in the world and home to such artists as Avicii, Justin Bieber, Sam Smith, the Weeknd and Kanye West. This is a huge step for SoundCloud as it now holds official partnerships with two of the three major record labels, having previously inked a deal with Warner Music Group back in November 2014.

Now with UMG on its side, the platform will have more tracks for listeners and less lawsuits over infringements. It will also give the platform the opportunity to work with UMG in order to host user-generated remixes, while the label and its extensive roster of artists will be able to take advantage of SoundCloud's monetization options.

The primary sources of complaints against SoundCloud have been the widespread takedowns, strikes and account suspensions, but listeners and artists alike should be celebrating this deal as a turning point. The agreement with UMG paves the way for a content ID system similar to YouTube that would allow the platform to safely host unofficial and bootleg remixes as original artists receive royalties, alleviating the takedown epidemic.

In other words, this means that takedowns are very much on the way out! Sure it's been a bit rocky, but Soundcloud remains the largest streaming platform that allows independent artists to instantly upload their own tracks without the help of labels or aggregators and without the headaches of the delivery process. With lofty goals come lofty hurdles, but SoundCloud is winning over the industry and after this deal, other streaming platforms should be nervous.

In an interview with TechCrunch, SoundCloud’s CEO and co-founder Alexander Ljung explains what went into this major milestone and why it took as long as it did after the deal with Warner.

"I think if you look at SoundCloud generally it’s the first time someone has tried to do something of this scale. We have over 100 million tracks on the platform and play over 10 million artists in a given month. We are really trying to create a platform that embraces all kinds of creativity, something that never existed before. There is no off-the-shelf solution for licensing for this. We had to work with the whole music industry to create something that never existed before, and that takes a little bit of time."

On top of UMG and Warner, SoundCloud previously signed landmark agreements with global music rights agency for the independent sector Merlin, the National Music Publishers Association and the British songwriters' agency PRS for Music.

The future of SoundCloud looks brighter than it has in recent years. All it needs now is a licensing agreement with Sony, which would put the platform on track to prove the profitability of its innovative streaming model and continue to modernize the industry. While SoundCloud has yet to introduce ads outside of the U.S. market, the platform is expected to roll out plans for both global advertising as well as paid subscriptions for users to stream without ads in the coming months.

"We have two of the three major record labels and all of the publishers, as well as all of the large indie bodies. Pretty much most of the music industry is already using SoundCloud and recognizing the value of monetizing content there," Ljung said.

Sources: SoundCloud, TechCrunch, NY Times

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