SoundCloud, The Music Startup Twitter Almost Acquired, Is Reportedly Negotiating Deals With Major Record Labels To Avoid Getting Sued

Soundcloud ceo alex ljungSoundCloudSoundCloud CEO Alex Ljung

SoundCloud is reportedly in talks with a number of major record labels, including Universal Music Group, Sony Music Entertainment, and Warner Music Group.

SoundCloud, sometimes referred to as the “YouTube of music,” lets people upload and share songs.

SoundCloud is now negotiating for licenses to play songs from those major labels, Bloomberg reports.

That’s likely because some of the songs on SoundCloud have been uploaded without the owners’ permission, which leaves the door open for legal disputes.

SoundCloud would reportedly give each label anywhere from a 3% to 5% stake in the company, as well as a percentage of future revenue. In exchange, SoundCloud would be protected from getting sued over copyright infringement.

Record labels holding stakes in music companies is nothing new. Before Apple bought Beats Electronics for $US3 billion earlier this year, Universal Music had a 14% stake in the company. Universal also has a 5% stake in Spotify.

As of October 2013, SoundCloud had 250 million monthly users. Earlier this year, SoundCloud was valued at $US700 million following a funding round.

Back in May, Twitter was reportedly in talks to buy SoundCloud but backed out of the deal.

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