Soundcloud is being sued for not paying musicians royalties

A major British rights organisation is suing music streaming service Soundcloud over its failure to pay royalties to musicians.

In an email sent to its members, the Performing Rights Society for Music (PRS) announced that it felt it has "no alternative but to commence legal proceedings," following "five years of unsuccessful negotiations."

We saw the letter over on Factmag.com.

Copyright has always been a thorny subject for Soundcloud. It has grown off the back of popularity with DJs and its suitability for hosting long mixes containing multiple tracks - to which the creators often do not have the necessary rights to legally reproduce. Launched in 2008, the Swedish company is currently working on expanding its licensing agreements with rights holders and record labels - with varying levels of success. A deal with Universal Music is believed to close, while Sony removed its library in May.

PRS argues that Soundcloud needs a "PRS for Music license for its existing service available in the UK and Europe," something it says Soundcloud denies. Consequently, "it is not remunerating our members when their music is streamed by the SoundCloud platform."

In a statement provided to Business Insider, Soundcloud called the lawsuit "regrettable," and says that the company "believe[s] this approach does not serve the best interests of any of the parties involved."

Here's Soundcloud's full statement:

It is regrettable that PRS appears to be following this course of action in the midst of an active commercial negotiation with SoundCloud. We believe this approach does not serve the best interests of any of the parties involved, in particular the members of the PRS, many of whom are active users of our platform and who rely on it to share their work and communicate with their fanbase.

SoundCloud is a platform by creators, for creators. No one in the world is doing more to enable creators to build and connect with their audience while protecting the rights of creators, including PRS members. We are working hard to create a platform where all creators can be paid for their work, and already have deals in place with thousands of copyright owners, including record labels, publishers and independent artists.

And here's the full email from PRS, via Factmag.com:

Dear Member,

PRS for Music begins legal action against SoundCloud

After careful consideration, and following five years of unsuccessful negotiations, we now find ourselves in a situation where we have no alternative but to commence legal proceedings against the online music service SoundCloud.

When a writer or publisher becomes a member of the Performing Right Society, they assign certain rights to their works over for us to administer, so it's our job to ensure we collect and distribute royalties due to them. SoundCloud actively promotes and shares music. Launched in 2008, the service now has more than 175m unique listeners per month. Unfortunately, the organisation continues to deny it needs a PRS for Music licence for its existing service available in the UK and Europe, meaning it is not remunerating our members when their music is streamed by the SoundCloud platform.

Our aim is always to license services when they use our members' music. It has been a difficult decision to begin legal action against SoundCloud but one we firmly believe is in the best, long-term interests of our membership. This is because it is important we establish the principle that a licence is required when services make available music to users. We have asked SoundCloud numerous times to recognise their responsibilities to take a licence to stop the infringement of our members' copyrights but so far our requests have not been met. Therefore we now have no choice but to pursue the issue through the courts.

We understand SoundCloud has taken down some of our members' works from their service. With our letter of claim, we sent SoundCloud a list of 4,500 musical works which are being made available on the service, as a sample of our repertoire being used, so that they understood the scale of our members' repertoire and its use on the service. We asked them to take a licence to cover the use of all our members' repertoire or otherwise stop infringing.

SoundCloud decided to respond to our claim by informing us that it had removed 250 posts. Unfortunately, we have no visibility or clarity on SoundCloud's approach to removing works, so it is not currently clear why these particular posts have been selected by them given the wider issue of infringement that is occurring. Ultimately, it is SoundCloud's decision as to whether it starts paying for the ongoing use of our members' music or stops using these works entirely.

If the streaming market is to reach its true potential and offer a fair return for our members, organisations such as SoundCloud must pay for their use of our members' music. We launched our Streamfair campaign in June to raise awareness of this issue and highlight how music creators need to be properly remunerated from streaming. We believe that all digital services should obtain a licence which grants them permission to use our members' music and repertoire, in this case the works of songwriters, publishers and composers.

The streaming market cannot fairly develop unless this happens. We have always been pro-licensing and pro-actively work with organisations in order to propose an appropriate licensing solution for the use of our members' works.

We remain hopeful that this matter can be resolved without the need for extended litigation. Members will appreciate that this is now a legal matter and our ability to communicate around it is therefore limited by the legal process. However, we will try to share information and updates whenever we can.