Mixcloud strikes music streaming deal with Warner
London start-up also negotiating with other big record labels
A smaller but growing rival to SoundCloud has struck a licensing deal with Warner Music to start a subscription business in the hunt for a piece of the music streaming gold rush.
Mixcloud’s agreement with Warner, home to pop star Ed Sheeran, is the London start-up’s first direct licensing agreement, and it is negotiating with the other two big labels that control the majority of the world’s popular music.
With the deals in place, the audio streaming group is hoping to convince listeners to pay for shows and other content on the site.
Mixcloud was started by Cambridge engineering graduates who ran a university radio show, and has built a following as a place for mixtape enthusiasts to share and find music. About 17m listeners a month tune in to 12m radio shows, podcasts and DJ sets by the likes of Carl Cox and Talking Heads’ David Byrne.
The service’s scope until now had been limited, in part due to licensing laws. It used statutory radio licences and was therefore not allowed to offer online downloads, a key feature for people listening to music under ground or on a plane.
Co-founder Nico Perez admits Mixcloud is leaping into a crowded field, as companies ranging from Tesla to Amazon have made moves into the music streaming market.
Streaming subscriptions have so far been fairly homogenous. For about $10 a month, a listener can rent access to 30m songs from several companies, including Spotify and Apple.
“We don’t want to do the $9.99 a month. That’s done. That market is served,” says Mr Perez. “What we’re building is going to be very customised.”
With Mixcloud also in negotiations with Universal Music and Sony Music, pricing and the details of the subscription product are still being worked out. But the company will not try to replicate Spotify’s all-you-can-eat song catalogue, says Mr Perez. Instead they plan to offer subscriptions to specific radio personalities or programmes, who will also earn a cut of the sales.
For the big record companies — which earn royalty payments each time their artists’ music is streamed — the more subscription players, the better. “If we do this right, you could see people subscribe to more than one service,” says Ole Obermann, chief digital officer of Warner Music.
Record labels and the tech companies that distribute their music have spent years carving out a structure to share the money from streaming services they once fought.
While the labels have been hesitant to budge on a $10 a month price, Warner Music does not view Mixcloud as a direct threat to Spotify, which made the label more open to experiment, according to one person close to the deal.
Mixcloud’s roots date back to 2005, when Mr Perez and his classmates, frustrated with the difficulty in sharing mixtapes online, founded the company with a quest to make a “YouTube for radio”. Mixcloud specialises in long-form audio, with the average programme running about 45 minutes, and like SoundCloud, it relies on user-uploaded content.