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SoundCloud offers a subscription service in a late play for mainstream music fans

SoundCloud offers a subscription service in a late play for mainstream music fans
SoundCloud's new subscription service will add tens of millions of licensed tracks from major label artists. Above, a screen shot of the audio-sharing app on an iPad. (SoundCloud)

Streaming music company SoundCloud has amassed an enormous following while maintaining a roguish status in the growing industry for online tunes. Its 175 million users have been able to access its remixes, covers and mash-ups for free.

But now the Berlin firm is joining the mainstream by launching a subscription-based service, in an effort to increase revenue and grow its audience beyond the music aficionados and DJs that make up its loyal fan base. The service will add tens of millions of licensed tracks from major label artists.

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The new service, dubbed SoundCloud Go, will, like most rivals, charge $9.99 a month for commercial-free access to its library. SoundCloud will offer a month-long free trial and give users the ability to save songs to their phones and tablets. Those who don't pay will still have access to the free version of SoundCloud, which plays ads.

SoundCloud is coming late to the subscription model, and will be entering a crowded space. Swedish competitor Spotify has attracted 30 million users to its paid version. Apple Music launched last summer with much fanfare and is still playing catchup with about 11 million subscribers.

It also remains to be seen whether the nascent streaming business can produce profits.

SoundCloud co-founder Eric Wahlforss acknowledged that the business of streaming music is competitive. Still, he argued, the company's vast catalog of songs and its network of "creators" set SoundCloud apart. Like YouTube, SoundCloud lets users upload their own tracks.

"Even though there are a few other players out there, SoundCloud has a very clear place in this space," said Wahlforss, who is the company's chief technology officer. "One of the things that makes SoundCloud really great is that we have so many creators and so much content that isn't available anywhere else."

The long-anticipated launch comes after years of negotiations with record labels and music publishers, who have not always been friendly to the upstart firm that was founded in 2008. Sony pulled its music from the site last May over royalties, and the British songwriter group PRS for Music accused SoundCloud of failing to license its songs (SoundCloud eventually settled with PRS).

SoundCloud has long been controversial in the music industry. Labels and artists including Drake and Kanye West have used the service to promote new music, but the companies also have wanted to collect royalties.

In 2014, SoundCloud added advertising to its service to generate revenue and compensate rights holders including artists and songwriters.

In order to gain legitimacy, SoundCloud had to enter complicated licensing deals that would let rights holders collect royalties from the service and let the service's users remix and mash-up copyright-protected work. SoundCloud users in the past have been plagued by takedown notices from labels and publishers.

SoundCloud began to make headway in 2014 when it signed a licensing pact with Warner Music Group. The company later hammered out an agreement with Universal Music Group, leaving Sony Music Entertainment as the biggest holdout. Sony and SoundCloud announced a deal this month, clearing the way for a subscription service.

Wahlforss said the artists and labels will have the freedom to choose what songs are available on the free version of the service for promotional purposes.

The expanded SoundCloud will have 125 million tracks, compared with the 30 million offered by established streaming options. The bulk of those SoundCloud tracks are generated by users. Wahlforss said he wants the service to be a one-stop shop for consumers.

"This means you no longer have to go to all these different places to listen to music," Wahlforss said. "The notion that you can have top-tier artists like Drake and Rihanna next to a mash-up and a DJ mix is pretty amazing."

Follow Ryan Faughnder on Twitter for more entertainment business coverage: @rfaughnder

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