It signified the first steps towards monetizing content on the platform, for which a new invite-only account type was introduced: Premier. Besides monetization, these accounts offer a variety of exclusive features such as visual banners, special artwork on tracks and the ability to geographically restrict content.
In early April, the platform reported having brought on over 100 of these invite-only premier partners, to which they paid out more than $1.000.000 in advertising revenues.
Not a lot compared to the $295 million that ad-supported on demand streaming generated for US music industry in 2014, but it’s a start.
I have noticed that SoundCloud Premier and the accounts with visual profiles are still a big mystery to the majority of users, hence dedicating a post to it.
We’ll talk about how monetization came to life, the grey area of rights on the platform, Premier features and how to qualify.
A rights issue.
The new model is SoundCloud’s solution to ongoing tensions between themselves and rightsholders, particularly major labels and publishers. With the platform’s explosive growth in terms of available content, total plays and unique users, it was inevitable that these rightsholders would want to get paid.
Yet until half a year ago, they weren’t. These tensions lead to lawsuit threats by the major labels, which later developed into potential investment negotiations, where the majors were incentivized to license content to the platform in exchange for an equity stake.
From what has been made public, none of these talks came to fruition. However not long ago, the Warner Music Group signed a licensing deal with SoundCloud, making them the first major label to receive funds from the new advertising system.
The grey zone.
All this time SoundCloud has been operating based on a ‘loophole’ in the Digital Millennium Copyright Act, allowing them to transfer the responsibility for the nature of content from themselves as host to the user, as the latter has the freedom to upload almost anything. It’s user generated content.
Through the DMCA SoundCloud can steer clear from legal issues as long as they provide a way for rightsholders to report infringement, have a system in place to take down infringing content, and actively ban repeat infringers.
This leniency is exactly what many of us have come to love SoundCloud for. It is one of the few places on the web where creators can unscrupulously share content, from uncleared DJ mixes to unofficial bootleg remixes.
The freedom to do whatever you want with music, is at the core of what has driven the community of SoundCloud and its extraordinary traction with electronic music fanatics.
However the loophole that granted this freedom is also why SoundCloud has not been legally forced to pay the owners of the music. A paradox indeed.
Now that they have finally reached scale, passing the 175 million unique listeners per month (reported December 2014) and received multiple lawsuit threats, it was time to present a solution.
With On SoundCloud, the platform is introducing its monetization system. Similar to what we have seen with YouTube’s advertising system, SoundCloud will be displaying audio ads throughout their platform.
In order to implement these features, they have introduced a new account level – SoundCloud Premier – which is granted to a selection of partners, granting them monetization and a selection of other features, such as visual banners, artwork behind tracks and geographical control.
The roll-out of these features is a gradual process and SoundCloud has brought on a select number of partners to implement and test these features with. These include major publishers, distributors and multi-channel networks (these represent major YouTube channels), whom in turn are able to activate their clients (artists, labels) as SoundCloud Premier users.
I expect seeing full market adoption of Premier for all major players in the electronic music sphere towards the end of 2015.
How monetization works.
Premier partners can enable specific content for monetization, on which audio advertisements will be run.
These are short snippets that will be played at the start of an upload, or on externally embedded players of the content. Besides content related ads, SoundCloud will also display strictly brand related audio-ads in the sidebar of the platform.
Advertisements are only shown on content that has been enabled by Premier partners, and are currently only visible in the USA. No ads will be shown on any other content, so with the small number of current premier partners, the ad saturation is currently very low.
The monetization system is currently being tested in the USA (their most active territory) and will gradually expand to other territories, which SoundCloud has expressed to do within this year. The goal is to eventually allow rightsholders to monetize their content on the platform, worldwide.
In order to monetize content, Premier partners need permission from the master-right holder(s) to be able to commercially exploit their work(s), and they need to collect the relevant publishing information.
In other words, when a label or artist owns the master-rights and publishing rights to a work, content can be monetized with ease. If you are working with third parties as an artist, say another label and you are exclusively published, you’ll need to get clearance from the label and gather the publishing details.
Premier partners have access to all the functionality of the traditional Pro Unlimited subscriptions, together with visual profiles, the ability to monetize content, in-depth statistics and ability to control content geographically.
Subscription fees are also eliminated, making partnership essentially free – except for the commission on advertising revenues that one might pay to their distributor (that granted them Premier) or SoundCloud themselves.
Premier partners are instantly recognizable through the large horizontal banners that are hosted on their accounts. These can be used for branding and to promote releases, and can even include a link-through.
However SoundCloud doesn’t like it when you go overboard with text. They want to keep the ads to themselves.
Together with visual profiles, Premier partners are able to emphasize their high-priority releases by activating visual tracks – with the integration of artwork on selected uploads.
These make the track stand out throughout the platform, displaying the ‘visual track’ on both the Premier partner’s account and on the stream of that account’s followers. Visual tracks also expand when played, showcasing more of the artwork, which is something that traditional uploads don’t do.
Premier partners are limited to having up a maximum of five visual tracks at one time. Whenever they have reached the cap and want to activate a new release, they’ll have to remove the feature from an older upload.
Premier partners have the ability to geographically control their content, allowing restriction of uploads to specific regions – but also the sequential publication of content to certain regions.
The latter is very useful for artists and labels that only want to make content available in certain countries, or to grant licenses to others for only those specific territories. This encourages closer collaboration between artists, labels and promotional channels on the platform – and especially for majors, whom often release content sequentially over different territories and dates.
How to get Premier.
You might wonder how I know all this.
A month ago I traveled to Vancouver, Canada, to work with a company called The District (also known as edmDistrict). A multi-channel network, representing major tastemakers such as MrSuicideSheep and Trap City. They are among the first players able to bring on Premier partners, and I’m helping them with all things SoundCloud.
If you’re interested in getting a Premier account, there’s multiple ways to go about this. Firstly, you should be aware that Premier accounts are currently restricted to only the most high-traffic accounts on the platform. Wherever you might apply, if your numbers are not impressive, it may take a long time before you are activated.
You can request activation directly via SoundCloud here. The more effective route is to get a partnership with one of the few distributors, labels or multi-channel networks that can extend Premier invites. Find a list below (source).
Labels and distributors
- BMG Sony ATV/EMI
- Maker Studios (audio focused deal)
- Fullscreen (audio focused deal)
- INDMusic (music focused deal)
- EDM Network (music focused deal)
- edmDistrict (music focused deal)
If you’re in the electronic music sphere, The District is probably your best fit. To apply with them, place an application here.
Want to know more about dominating SoundCloud? You should check out my book The SoundCloud Bible. The Second Edition just came out and features a ton of strategies on how to grow your audience and get more plays. If you’re interested in marketing direct on the SoundCloud platform consult this article which I’ve dedicated fully to that topic.