Has SoundCloud’s Plug Been Pulled?

By: Michael Boehringer

Recently, in the news and other media outlets, there has been a lot of talk about the future of SoundCloud. SoundCloud is a music sharing application that allows users to upload and share both their own music and others.[1] User have the option to use the application for free or pay a monthly subscription fee to gain complete access and ability to download songs for enjoyment anytime.[2]

Talk, as of late, has been about SoundCloud’s struggles to find investors.[3] But the question then becomes, why is such a popular app struggling so hard to sustain investors when other similar platforms such as Apple Music have succeeded? The answer is twofold. The first reason SoundCloud is struggling is because the Copyright First Sale Doctrine is dying.[4] The Copyright First Sale Doctrine is a legal doctrine that allows a purchaser of a work to sell, or otherwise dispose of the possession without the permission of the copyright owner.[5] The application of the First Sale Doctrine has not been successful in protecting first sale buyers from distributing digital copies.[6] The First Sale Doctrine has struggled to protect digital works for three main reasons. First, digital transfers (computer to computer) always makes copies. This violates 17 U.S.C. § 106(1), which prevents users from reproducing the purchased work. Second, the evolution of licensing has essentially rendered the First Sale Doctrine moot because a license does not involve the actual sale of the work.[7] Lastly, the passing of the Digital Millennium Copyright Act (DMCA), which “criminalizes production and dissemination of technology, devices, or services intended to circumvent measures (commonly known as digital rights management or DRM) that control access to copyrighted works,” has halted most other attempts to circumvent the DMCA.[8]

The second reason SoundCloud is struggling when other similar apps are not is because of the content involved. Other applications such as Apple Music mainly license their music from large label companies such as Warner Music Group, which allow for different rights and sometimes more flexibility to distribute.[9] SoundCloud has stuck to mainly promoting the users own music, music that is not licensed by a record label. However, in recent times SoundCloud has branched out and made licensing deals with companies such as Sony Music.[10] But, as JoJo famously sings, it might be too little too late. Such an application has not gained a following in the digital music world. Most people are looking for the hot, new song, not some remix a random user created. For this reason, SoundCloud has struggled to find investors.

Overall, it appears that SoundCloud will continue to struggle unless it finds a way around the expensive licensing required to share popular music. If it can solve this problem, it would be at the forefront of the digital music sharing applications, making available songs no matter if it holds a license or not.

[1] What is SoundCloud?, https://help.soundcloud.com/hc/en-us/articles/115003570488-What-is-SoundCloud- (last visited Oct. 9, 2017).

[2] Denise Lu, The Beginner’s Guide to SoundCloud, Mashable, Nov. 10, 2013, http://mashable.com/2013/11/10/soundcloud-beginners-guide/#GrLnK7tYc5q1.

[3] See Josh Constine, SoundCloud Sinks as Leaks Say Layoffs Buy Little Time, TechCrunch, July 12, 2017, https://techcrunch.com/2017/07/12/soundshroud/.

[4] Annemarie Bridy, The Digital Death of Copyright’s First Sale Doctrine, Freedom To Tinker (Oct. 10, 2011), https://freedom-to-tinker.com/2011/10/10/digital-death-copyrights-first-sale-doctrine/.

[5] See 17 U.S.C. § 109.

[6] See Bridy, supra note 4.

[7] See John Villasenor, The ‘First Sale Doctrine’ and Its Impact on the Music Business, Brookings, May 3, 2013, https://www.brookings.edu/opinions/the-first-sale-doctrine-and-its-impact-on-the-music-business/.

[8] Digital Millennium Copyright Act, Wikipedia, https://en.wikipedia.org/wiki/Digital_Millennium_Copyright_Act.

[9] See Marc Schneider, Apple Music Renews Licensing Deal With Warner Music, Billboard, Sept. 7, 2017, http://www.billboard.com/articles/business/7957545/apple-music-warner-music-licensing-deal.

[10] Micah Singleton, SoundCloud Has Signed a Licensing Deal With Sony Music, The Verge, Mar. 17, 2016, https://www.theverge.com/2016/3/17/11256504/soundcloud-sony-music-licensing-deal.