SoundCloud Starts Paid Subscription Version

Audio-sharing platform SoundCloud on Tuesday will begin selling paid subscriptions to one of the biggest music catalogs online, a move that will test the willingness of young consumers to pay for tunes from a service they're accustomed to using for free.

"SoundCloud Go," as the company's new paid tier is called, lets users listen to music offline and without ads, and includes access to the nearly 100 million mixes, mashups and other musical creations by emerging artists and DJs for which the site is known, in addition to the 30 million-song catalog owned by established record companies and offered on other subscription services such as Spotify.

It is the first service of its size to allow artists and labels to control on a case-by-case basis what they put behind the paywall—an ability that record companies have been pushing for in recent years as they aim to maximize revenues amid declining CD and download sales and streaming growth. Spotify so far has required that all of the content on its paid service is also available to its more than 80 million free users, who can't listen to songs on demand but can play specific albums or artist catalogs on shuffle. That stance has irked a litany of stars such as Taylor Swift, who pulled all her music from Spotify in late 2014, and Gwen Stefani, who is withholding her solo album, released March 18, from Spotify until April 1.

Apple Inc.'s Apple Music, with about 12 million subscribers, doesn't have a free tier, while Alphabet Inc.'s YouTube contains all the same videos that paying YouTube Red subscribers can view ad-free and offline.

To tempt free users to upgrade, SoundCloud's app highlights paid-tier songs in red and offers 30-second previews of each. Users can press buttons to unlock the songs by paying for a subscription, which costs $10 a month for Android and web users and $13 a month for iPhone and other Apple device users, because of the 30% fee that Apple charges app makers for in-app purchases. Free users can still add songs behind the paywall in snippet form to their playlists, and share them with friends.

SoundCloud currently reaches about 175 million listeners each month through its own mobile apps and sites as well as through other channels such as social media. It counts tens of millions of active monthly listeners, though it hasn't disclosed that number, and it is especially popular with a young demographic, said SoundCloud's co-founder and chief technology officer Eric Wahlforss.

Berlin-based SoundCloud, founded in 2007, gained most of its traction as a free site for emerging artists and DJs to share and promote their music. The company started advertising two years ago amid pressure from major record companies, who owned the rights to some of the material being shared on the site without their permission. It struck its first big licensing deal with Access Industries' Warner Music Group in November and has since reached agreements with Vivendi SA's Universal Music Group and Sony Corp.'s Sony Music Entertainment as well. All three deals were signed on the condition that SoundCloud would launch the paid service.

Mr. Wahlforss said that many of its users have been asking for an ad-free, offline listening option, but he suspected the biggest selling point might be "what they don't know that they want," the ability to listen to all of their music in one place.

Pandora Media Inc. is planning to launch an on-demand, ad-free tier later this year as well, betting that it can get at least 10% of its roughly 80 million free Internet radio listeners to subscribe.

Write to Hannah Karp at [e-mail]

(END) Dow Jones Newswires

March 29, 2016 09:25 ET (13:25 GMT)

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