SoundCloud is trying to become Spotify by offering artist contracts [Updated]

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SoundCloud has been doing everything in its power to mirror Spotify’s success for at least a few years, and will now attempt to follow the streaming giant into the world of artist contracts.

No doubt inspired by the success of “SoundCloud rappers” like Lil Xan, Lil Pump, and other, presumably non-Lil performers, the platform took the next step in its push to become a content-creator-first community by making its SoundCloud Premium service available to the public last week.

Like Spotify, SoundCloud Premium promotes itself as “a new kind of monetization program” which allows indie artists to upload their songs directly to the platform and make money without having to go through the typical record/label process. In theory, it sounds like a win-win situation for hungry entrepreneurs. The problem is that the contracts they do have to sign might be even worse than the ones offered by studios, if you can believe it.

A breakdown of the contracts

The Verge offered a breakdown of the contracts, and hooo boy.

While self-monetization purports to offer a more fair alternative to the traditional label system, SoundCloud’s deal pushes artists into restrictive terms, with ambiguous payment dates and payout percentages that can change at any time. Even worse, artists are asked to sign away all rights to sue the company, giving them no good options for contesting the deal.

It also notes that with the “covenant not to sue” and the mandatory arbitration clause, artists who sign not only agree to never sue, but it means that the artist cannot assist in someone else’s lawsuit against the company either. All those disputes will have to be taken to arbitration, instead of court.

The wording contradicts a SoundCloud spokesperson

According to entertainment/media attorney Jeff Becker, the contract “will allow artists to monetize the exploitation of their music on SoundCloud only if the artist agrees to forego all existing claims he or she may have against the company,” which comes in direct contradiction to the claims made by SoundCloud spokesperson Sheri Ladner that “the clause only applies during the term of the commercial deal.”

So basically, SoundCloud could conceivably fail to pay an artist what they’re owed or even change the terms and percentages of what they’re owed, and the artist would be powerless to bring legal action against them as a result. (*breathes in proudly*) The music industry, ladies and gentlemen!

Update: SoundCloud has reached out to KnowTechie to clarify the terms of its Premier program:

While nothing changes in the way we operate the program, we’ve updated the original agreement to ensure it’s clear, and removed any language that may be unnecessary in the open service we have now. This includes the removal of the outdated covenant not to sue language that was part of our previous invite-only agreement.

We are a creator-first platform dedicated to building industry-leading products and services to help creators grow their careers. We appreciate the feedback and will always respond as quickly as we can to keep improving the platform for creators. On background, I thought it was worth sharing we’ve run the SoundCloud Premier beta program for a number of years, and have had a lot of happy creators.

We were able to get our hands on the new agreement, check out it below:

Revised SoundCloud Premier … by on Scribd

To learn more, read the company’s blog post clarifying the SoundCloud Premier agreement here.

What do you think of the SoundCloud contracts? Let us know in the comments.

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Jared Jones

Writer. Editor. Barelyknewer. Hate mail can be directed to j j o n e s @ k a r s f o r k i d s d o t e a r t h l i n k