SoundCloud inks deal with Warner, plans to launch subscription service next year

SoundCloud is getting ready to launch a music subscription service within the first half of 2015, and has inked a deal with Warner Music that will allow it to use some of Warner’s catalog for both its current ad-supported service as well its future subscription tier, both companies announced Tuesday.

The announcement didn’t spell out the commercial details of the deal, which likely includes Warner taking a small stake in SoundCloud. However, it did reveal some interesting details on the content covered by the arrangement:

The deal includes licensing terms that will provide WMG and its artists greater ability to manage the availability of content, while providing a path towards delivering additional revenue from user-generated mixes and mash-ups of WMG music.

What’s tnteresting about this isn’t just the flexible content licensing model, which could mean that Warner can start to stagger the release of its music, making them available to other subscription services first, and to SoundCloud. It’s also the fact that it includes DJ sets and remixes. For SoundCloud, this is the first step towards a business model that’s much more closely modeled after YouTube than Spotify, capable of licensing and monetizing user-generated media.

There had been reports about SoundCloud closing in on deals with major record labels since this summer, and the Wall Street Journal reported earlier on Tuesday that the deal with Warner was about to be finalized.