SoundCloud has proven useful for a lot of unknown artists to get their music out there and seen by the world. It's also been a place for podcast storage and a venue for commercial artists to release music that may or may not appear on their albums. SoundCloud is so popular that even music labels are putting music on the site, accompanied with ads, of course. The success has been so high for SoundCloud that the company has been exploring offering a paid service on the site to compete with Spotify, Apple Music and the like. Cue the expected infringement lawsuit, this time from Universal Music Group and Sony Music Entertainment.
SoundCloud has been busy working on deals with different companies and record labels, including UMG and Sony. Things looked to be going well until SoundCloud said that it would be leaving the free, ad-supported service up and running, and just offer a premium service on top of that. This was back in October and that's when Universal pulled out of negotiations entirely. In March, Sony then pulled a good portion of its music from the site. Now, the two labels have banded together to serve SoundCloud with a "massive copyright infringement" lawsuit.
An executive who wished to remain anonymous said that the labels don't like SoundCloud's "attitude" during negotiations, which led to the brash decisions. The labels believe no service should be free and that SoundCloud should have moved to a strictly premium platform. For SoundCloud, that would've been sure to kill a lot of the site's momentum, considering that there are 175 million active users per month, with over 10 million accounts uploading content to the site.
A leak at the beginning of this month showed some internal documents about SoundCloud's business models moving forward, with users being able to opt for limited service that would include no ads and additional features for a small monthly fee, or paying a bit more for SoundCloud's full catalog. The documentation also showed that there was no intention in departing from an ad-supported free tier.
We'll have to see if SoundCloud will choose to settle with UMG and Sony, or if they will fight this thing in court. It seems that the lawsuit could be construed as a little unfounded, as it appears to have come to fruition because of a disagreement in business models. Either way, I wouldn't expect SoundCloud to move away from offering a free service, since that is what made the site.