Mixcloud Cut A Deal With Warner: What Does It Mean?

Last night on the Mixcloud blog, the online DJ mix streaming site announced that they have entered a “direct licensing agreement with Warner Music group”. This is a big deal because (until now) Mixcloud hasn’t had a direct deal with a record label. Keep reading to learn more.

Warner + Mixcloud

This new deal is a licensing agreement – and while we’re not certain what the specifics are, it does seem to be with the goal of eventually monetizing mixes on Mixcloud. The official press release notes:

“This new recorded music licensing agreement with Warner Music Group will usher in a direct relationship and a new phase for Mixcloud. The deal will help enable an innovative subscription offering that allows fans to subscribe to individual creator channels for a more interactive listening experience. This approach will help audio creators on the platform monetise their content by developing a new marketplace for audio subscriptions.”

Interestingly, this seems to be pitched as an open-minded approach from Warner’s side of things – with Ole Obermann (EVP, Business Development & Chief Digital Officer at Warner) noting:

“This deal is a good example of our willingness to experiment and lead in embracing differentiated new business models. As streaming opens up access to a vast universe of music, we are seeing a complimentary rise in fans’ engagement with curated experiences, such as playlists, on-demand radio shows, and DJ sets. […]As we see [Mixcloud’s] user base expand, this partnership will unlock new commercial value for our artists and their music.”

How Did Things Work Before The Deal?

Without direct deals with music labels, Mixcloud worked to pay out royalties only with local collecting societies like SoundExchange and U.S. performing rights organizations like ASCAP and BMI. With a label deal in place, this means a more explicit agreement to allow Warner’s massive catalogue of music to be distributed on Mixcloud inside of mixes.

We have heard of a number of users experiencing takedowns on Mixcloud associated with more “mainstream” music content (like pop music) – so adding Warner on as a partner could absolutely have a positive impact there.

What Does This Mean For DJs That Have Content On Mixcloud?

Right now, nothing will change. But it seems that, based on this press release, there’s soon to be a higher focus on monetization and subscriptions. This could be for a number of motivations:

• paying out the necessary royalties negotiated in the Warner deal
• paying individual creators for their work (perhaps similar to how YouTube pays their creators?)
• removing focus from Mixcloud being an ads-driven site and more towards subscriptions

“Mixcloud co-founder Nico Perez told FT, ‘We don’t want to do the $9.99 a month. That’s done. That market is served. What we’re building is going to be very customised.’” – Variety Magazine

But in the music streaming world, subscriptions are a double-edged sword. Look at companies like Spotify and Apple Music for successful examples – but look at Soundcloud to learn how subscriptions and label deals could potentially stifle innovation.