Market Overview

Is SoundCloud Planning On Competing With Apple And Pandora?

Share:

Berlin-based startup, SoundCloud, is reportedly looking to compete directly with the likes of Apple Inc. (NASDAQ: AAPL), Pandora Media Inc (NYSE: P), and Spotify.

According to TechCrunch, a leaked contract suggests that that SoundCloud would pay royalties equivalent to 10.5 percent of its revenue, including ads, or 22 percent of revenue from sound recording rights, whichever is higher.

The contract also references two tiers of premium services, which could enable subscribers to listen to and even download ad-free music. The contract does not list a price, though it does say that labels could take as much as $0.18 per user per month for the first tier, while they could pocket $0.80 per user per month on the expanded tier. Labels would receive those payments if they were higher than the other compensation agreements.

This contract surfaces as reports suggest that Apple will introduce its streaming service next week at the Worldwide Developers Conference. Apple will reportedly charge $10 per month, in-line with Pandora and Spotify's offerings. Apple's offering will differ in that it will rely on human-curated and even human-hosted channels.

Related Link: How Will Apple's Streaming Music Service Compare?

In a report this week, the Wall Street Journal said that Apple is "rushing" to have deals in place with recording labels and artists to stream music.

Music labels have increasingly become skeptical of streaming services. Last month, Sony pulled some of its artists music in a move that resulted from the "lack of monetization opportunities."

Year-to-date, Pandora has slightly outperformed the S&P 500, gaining 3.3 percent compared to 2.6 percent gains in the broad index. Over the past year, however, Pandora shares have slid 25 percent.

Apple, which would not receive a significant amount of revenue from a streaming service, has gained 18.3 percent year-to-date.

 

Related Articles (AAPL + P)

View Comments and Join the Discussion!

Posted-In: SoundCloud Spotify techcrunchNews Rumors Tech