SoundCloud Steps Up Revenue Drive In Deal With Zefr, YouTube’s Content Tracking Partner

Audio streaming platform SoundCloud, now on the road to monetizing more of the tracks on its platform through ads and paid subscriptions, is adding a key partnership into the mix to help track what gets played and when: it is now working with Zefr to identify content posted and listened to on the platform.

Today’s announcement is light on detail — Zefr notes in a statement that the aim is to “better understand the sharing of content on the platform.” We’ve sent several questions both to Zefr and SoundCloud asking about how the partnership will work, and whether others in the rights management space like Kobalt might also get involved. We will update as we learn more. But what is more clear is that it’s being put in place more generally as part of a larger revenue push.

“SoundCloud is continuing its evolution as a mature platform for labels and advertisers,” said SoundCloud co-founder and CEO, Alexander Ljung, in a statement. “Working with Zefr, SoundCloud is taking another step to becoming the powerhouse player in the digital audio business.”

This partnership is important for both Zefr and SoundCloud’s businesses.

Zefr made its name as a partner of YouTube’s, where it tracks how both authorized and unauthorized content are posted on the video network. Its flagship services, Content ID and Brand ID, identify not just music and film streams but also products like Coke. Altogether, working with brands like Nascar and labels like Sony, Zefr says it tracks 275 million videos online and over 31 billion video views a month.

In fact, YouTube had really been Zefr’s only major streaming platform partner up to now. But when Zefr picked up a $30 million round of funding last year from IVP, the plan was to use the investment tap into the growing worlds of media streaming and social media to work with others beyond Google’s video property. SoundCloud is the first new partner it’s announcing — among others that have yet to be named, we understand.

It’s a fitting precedent, considering that SoundCloud has been described as “YouTube for audio.”

SoundCloud has disclosed just over $123 million in funding to date, and last reported in 2014 that it had 175 million active users. At its current rate of growth, it is likely to have more users today.

However, it has also been racking up high costs as it has grown, according to the last accounts it filed in the UK, where the business is registered.

In its 2013 filings, Soundcloud posted turnover of €11.2 million ($14.1 million), up 40% from 2012’s revenues of €8 million. But its operating loss in the period more than doubled, to €23.1 million ($29.2 million) in 2013 from €12.4 million in 2012.

This likely means that the company is looking for more investment. Indeed, there are reports that it’s raising $150 million at the moment at a $1.2 billion valuation. But it also points to why SoundCloud is adding more tech into its monetisation strategy.

Having a tracking partner like Zefr is likely also to help with SoundCloud’s negotiations with primary content owners. Currently, Warner Music is the only major label that has announced a content licensing deal with SoundCloud. While this means that Warner may be the only label making money from SoundCloud streams, it potentially raises the question of whether others might pull or withhold content from the service.

“Zefr has been a leader in rights management for half a decade. SoundCloud is a vibrant platform where the fans are sharing content and finding the right ways to use that fan activity for the benefit of SoundCloud, its music label partners, and publishers. We are excited to use our technology and expertise to help make SoundCloud a go-to platform for content creators and advertisers,” said Zach James, co-founder Zefr, in a statement.

While SoundCloud may be small in comparison with the scale of YouTube, it has proven to be a very sticky platform, where more than 12 hours of music and other audio are uploaded every minute.