Red Bull, Sonos, Squarespace, Jaguar and Comedy Central are among the first brands that will place audio/image ads ahead of licensed content from partners including Sony/ATV, comedy site Funny or Die and some independent artists such as GoldLink.
SoundCloud has negotiated licensing deals with those entertainment companies, letting artists and record labels collect royalties from their streams for the first time as part of its new “On SoundCloud” creator partner programme.
On SoundCloud has three tiers: Partner, a free option for beginners sharing their first tracks, who will have access to basic stats about their uploads; Pro Partner, a paid subscription which offers more upload time and advanced tools and stats; and Premier, an invitation-only level that gives creators the opportunity to make money from their tracks through advertising. Revenue is currently only shared when tracks are played in the US.
In a blog post, SoundCloud says: “The introduction of advertising is an important step for creators. Every time you see or hear an ad, an artist gets paid. If you’re in the US, you’ll start to experience occasional ads from our brand partners. We’re bringing ads on gradually. In addition to supporting creators, ads will keep the service free and open for people to listen to SoundCloud.”
While the updates provide SoundCloud with the opportunity to monetise the hundreds of millions of streams it has on the platform and placate record labels looking to gain royalties from their artists’ digital content, introducing advertising runs the risk of alienating users that had opted for SoundCloud over the likes of YouTube and Spotify because it was ad-free.
For now SoundCloud will remain free for listeners, but it is understood the service is exploring the introduction of user subscriptions to allow them to remove ads.
SoundCloud does already generate revenue from fees it charges to its most active users. According to its most recent filings with Companies House in the UK, SoundCloud posted £8m in turnover and £12.4m in operating losses in 2012.
Earlier this year it was reported that Twitter had been interested in acquiring SoundCloud, but the microblogging service was understood to have backed away from the deal after investors voiced concerns about the long-term value of the acquisition.