License deal allows revenue to be generated through the audio sharing start-up.
Warner Music Group (WMG) has signed a deal with German company SoundCloud to licence its music, allowing revenue to be generated through the audio sharing start-up.
The Wall Street Journal reports that every time users stream a free song that WMG has opted to motinise, SoundCloud will have to pay royalties to Warner Music and its publishing division.
The deal is expected to explore new commercial and promotional possibilities and provide additional revenue to artists signed with the company’s Warner/Chappell Music publishing division.
It will not require Warner Music to license its entire catalogue to SoundCloud, as users mostly come to SoundCloud to discover fresh remixes and not new releases.
SoundCloud founder and CEO Alexander Ljung said, "We’re thrilled that Warner Music Group will be the first major label to join our new creator partner programme."
"We expect to generate significant revenue for Warner and its artists in the months and years ahead as we roll out an ad-supported offering and subscription service that delivers real value to the industry."
The company plans to launch a subscription service by the first half of 2015, which is expected to provide listeners with different levels of access for a monthly price. SoundCloud will continue to offer free listening options to its users in addition to the subscription service.
WMG Digital Strategy & Business Development EVP Jonathan Dworkin said: "SoundCloud is a distinctly artist-driven service, with a highly engaged global fan community at its heart.
"This deal will enable SoundCloud to further develop its product as well as its massive user base, and will deliver multi-tiered monetization while preserving the elements that have made the service so popular. It’s a win for artists, for rights-holders and for consumers."