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Do DJs Have A Future On SoundCloud?

The case of indie label Soulection says a lot about the struggle for cool tech companies to scale.

This past spring, Joe Kay did the same thing he'd done every week since launching his independent label and online radio show, Soulection, in 2007. He stepped to the decks and strung together a three-hour mix of dance, soul, hip-hop, and R&B, filled with remixes, rare dubs, trend forecasts, and occasional mainstream hits. Like all of his sets, it was driven by a cross-genre sensibility that suits partygoers and bedroom music nerds alike; Slum Village, Yung God, Snakehips and R. Kelly were all fair game. "People identify the show as a culture," he says over the phone from Los Angeles. "It's certainly a sound already. People make their own playlists and change the genre in iTunes to 'Soulection.' It's to that point."

But that mix, #170, would prove to be a turning point for the budding label. Weeks after it was uploaded to SoundCloud, Joe Kay woke up to a notification that his Soulection account had violated the streaming platform's terms of agreement and that two episodes hosted on the site—#170 and #171—had been removed for violating copyright. The two flagged shows counted for two strikes—one more, and Soulection's account, along with an audience of over 150,000 faithful listeners, would be permanently terminated. "Our biggest following comes from SoundCloud," Joe Kay says. It was a loss the label couldn't afford. Coming amid announcements of SoundCloud's new partnerships and evolving policies, Soulection's takedowns highlight the tense interdependence between independent labels and music distribution platforms. The internet has cracked the music industry open in some ways, but in others it's still locked tight.

SoundCloud was founded in 2007 as a tool for music distribution that allowed artists to upload, stream, share, and comment on audio files with ease. Arriving in the era of MGMT and M.I.A., when new music moved via sloppily coded MP3 blogs, MySpace profiles, and unstable anonymous services like Hulkshare, SoundCloud's smart, distinctive design stood out. The musician Beck, one of the platform's pioneering advocates, made headlines for himself and the site by uploading weekly DJ sets in 2009, then a novel idea. Web developer Lee Martin, with whom Beck has worked closely, put him onto the service. "For a mixtape that's 40 minutes long, SoundCloud allows you to comment on different parts of the track," Martin told Wired at the time. "That's incredible." SoundCloud streams and downloads were reliably hosted and easily embeddable, which made blogs happy, and their widgets featured prominent stats for plays and likes, so it was clear if a track was blowing up—both to the songs' creators and trend-forecasting fans. Users could subscribe to artist accounts directly, eliminating the need to check external sites aggregating the same material, and in 2013, the site introduced a feature that allowed users to repost someone else's SoundCloud track on their own page—a retweet for beats— essentially allowing anyone to start their own frictionless music blog within SoundCloud.

But despite its now 175 million users, last year SoundCloud posted a $29 million dollar loss. There was another looming threat, too: copyright. Much like YouTube, SoundCloud was built on user-generated, often amateur, content. While their policies are clear, their policing is often lax. SoundCloud hosts countless remixes and DJ sets, like Soulection's, which violate its terms of use by featuring uncleared source material, and there are constant straight-up uploads of songs by people who clearly don't hold copyright; right now, the most played Nicki Minaj song on SoundCloud ("Anaconda") was uploaded by a Brazilian Katy Perry fan account, while 19 million hits on Nicki's song with Jessie J and Ariana Grande have gone to an Egyptian uploader named Mahmoud Abd Shalaby. It was inevitable, then, when Bloomberg reported this July that the platform was in talks with the major three record labels, Universal, Sony, and Warner. In exchange for not suing, the Big 3 would each take a three to five percent stake in SoundCloud and a percentage of future earnings. Last week, the company confirmed the first agreement from these talks, announcing a partnership with Warner Music Group around it's new ad-supported platform "On Soundcloud": in addition to owning that three to five percent stake, Warner will collect royalties whenever their material is streamed on the platform.

Around the same time that these label negotiations were first reported, SoundCloud began rampantly flagging accounts for copyright infringement. "The labels were basically like, 'Either we're shutting you down, or we're going to own a part of you and police it ourselves," speculates Jacqueline Schneider, Soulection's director of strategic communication. Soulection had personal relationships with SoundCloud staff, having used the platform since the label's inception, but the wave of flaggings came without warning. As reported on DoAndroidsDance, Universal had even begun shutting down tracks directly, without SoundCloud's involvement. That sounds like what happened to Soulection's mixes #170 and #171. "[SoundCloud] didn't even tell me which song it was for," Joe Kay says, but he has a hunch. "I played the Lido remix of Disclosure's 'Latch' two weeks in a row. I didn't realize [Disclosure's distributor] Universal had shut Lido down for uploading that remix himself. I put so much time into every show, and for one song out of 85 to have a show taken down really pissed me off. That's when I realized that there was a crazy shift."

"We were using Soulection to constantly promote not just our artists but people that we thought should be put on... that was all we needed to be heard." -Joe Kay

Eric Wahforss, SoundCloud's CTO and co-founder, declined to comment on specific incidents or partnerships with labels. But of the flaggings, he said, "If we're told that any content has been posted without permission, we need to remove that content in accordance with applicable law. We understand the frustration for all parties involved—including DJs—and we are constantly reviewing and refining our policies as the new digital music ecosystem evolves. Rest assured it's top of our priorities to find a solution that suits everyone." But how does uploading a 60-minute mix differ from a four-minute song? How does the free promotion an artist gains from being featured on a popular account weigh against the violation of copyright? In other words: what can bigger DJ accounts, like Boiler Room and Diplo, get away with that smaller ones can't? These questions went unanswered from the SoundCloud camp, but their publicist Candace Locklear reinforces that there is a process for appeals: "If any user believes that content has been removed in error—for example, because they had the necessary permissions from the rights holder—then they are free to dispute the takedown."

Ultimately, none of this may be of much help for smaller labels like Soulection. "I get it," Joe vents. "In [the majors'] eyes, they see it as losing money. [SoundCloud] is in a fucked up position. It was inevitable. I knew it would happen someday. Even looking forward, everyone's like, what's the next platform?" Because no matter how talented an independent label's roster, or how strong their brand, they depend on other companies to reach their consumers. Often, these tech platforms are bred from a culture of buyout and big investment—the antithesis of many independent labels' mission statements. "We were using Soulection to constantly promote not just our artists but people that we thought should be put on," Joe Kay explains. "Between putting out a DIY release through Bandcamp and SoundCloud, then with the radio show, that was all we needed to be heard." Soulection eschewed album deals with flagship artists like Sango and Carmack for fluid single agreements and publishing splits. "We aren't a traditional label," he said. "We've been able to build this with no advance money, no finances." This lax model also meant the label only recently sought in-house legal counsel, in hopes of getting these two strikes lifted from their SoundCloud account. "It's hard to find a lawyer who gets us," Joe Kay says, "because we are such a unique platform."

The internet promised unlimited access and options to distribute music. Artists and indies could flourish by cheaply recording and sharing their own work, without big financial backing. But in practice, the tension between art and commerce is as sharp as ever, and major labels still hold massive influence over how recorded material reaches the ears of the listener. Before, music formats changed when major labels decided: the switch from vinyl records to CDs was largely spearheaded, orchestrated, and marketed by the labels that sold them. Now, platforms like SoundCloud and Spotify bubble up from independent tech firms that may or may not be influenced by music culture at all. Technology is the volatile middleman. Artists and fans gravitate toward platforms that prove most useful, then major labels chase them down and bend these new models to fit their own needs. Case in point: "On SoundCloud," SoundCloud's latest experiment, will allow "Premier Partners" to "make money on the platform (e.g. advertisements placed against their content)," Wahforss explains. "For now, access to the Premier level is by invitation only," he says, a caveat that still puts the power in SoundCloud's—and their new partner, Warner's—hands.

All of this raises the question: could we see this pattern reverse? If independent labels like Soulection continue to innovate in sound and format, why not step into the tech field themselves? When I propose it, Joe Kay is pessimistic. "Our priority right now is just putting out good music, touring, putting out a powerful message. We can leave that to the other guys that are just focused on creating technology." Jacqueline Schneider, the label's director of strategic communication, is optimistic that no matter which way the chips fall, Soulection will endure. "There's been talks on our end, because we are a music-tech startup, to develop our own way of distributing exclusive stuff and [start] a potential subscription service," she says. "If our SoundCloud gets shut down, it's not the end of the world."

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Do DJs Have A Future On SoundCloud?