SoundClouds big differentiator is its offering of unofficial, user-uploaded content that the major labels dont release and that isnt on Spotify or Apple Music. Or at least they werent. The first unofficial single-track remixes just went live on Spotify and Apple Music thanks to their partnerships withmusic rights management service Dubset.
Weve reached out to Spotify and Apple for comment. [Update: Spotify confirms that short-form mixes are now available. This is apparently just a small part of its integration with Dubset. It says the bigger part is when long-form mixed content becomes available, but theres no definite timing on that.]
Still missing are the multi-song mixsets DJs often share from their gigs. But Dubset is also equipped to distribute royalties from those and its deals permit them. Dubset CEO Stephen White tells me Mixes are coming next!
Dubset works by scanning an entire mix and matching every part of the track to its Mixbank of snippets of official songs based on Gracenotes audio fingerprinting database. Dubset matches the samples in a mix to these snippets, then distributes royalties for the play evenly to the original rights holders. In this case, Anderson .Paaks rights holders would get paid because his music is the basis of Jazzy Jeffs remix.
White says 700 million people a month listen to mixed content, making it a big opportunity. But record labels have historically fought against unofficial mixes because they considered them piracy since they werent getting paid. Dubset gives them a fair share, so theyll permit remixes and mix sets to stream on the major platforms. Royalty revenue from the platform is shared with rights holders while Dubset gets a cut.
Content owners have been very supportive. The publishing and label deals we have under license provides a large catalog to work with, White tells me. This allows some of the content that until now has only been on YouTube and SoundCloud to come to these great paid services where content owners will get paid!
The fact that unofficial content is now going live on Spotify and Apple Music could reduce the acquisition potential for SoundCloud, which the Financial Times says is in late-stage negotiations to be bought by Spotify. TechCrunchs sources confirm the two have recently been talking about M&A. But if Spotify can get the best of SoundClouds content without coughing up a ton of money for a broken company thats been struggling for years
Without the legal grey area of music as a differentiator, Spotify and Apple Music will end up competing on product features like Spotifys Discover Weekly playlist and Apples Beats 1 live radio station, as well as on exclusives and early access to big releases from top artists.
The real winners here, though, are the artists and listeners. Original rights owners will get paid, remix producers and mixset DJs can share their creativity without being pirates and listeners can hear the music they want no matter how it got made.