Once the world’s largest recording labels and movie studios see this happening, things can go bad quickly, unless certain preventative steps are taken. Bringing the business into line with the DMCA is a necessary first step, one which will see the hosting site respond to takedown notices in a timely fashion.

Other sites have gone a step further. As underlined by the MegaSong debacle, YouTube gives some big record labels the right to take down content they don’t like, even if there are no apparent copyright infringement issues. YouTube doesn’t appear to get involved much in the process either, leaving the labels to decide what goes and what does not.

Another company that headed down that route recently was SoundCloud. The audio upload site has been coming on in leaps and bounds over the past five years, in part due to the popular and sometimes illegal content uploaded by its users. Recently, however, it was revealed that not only had the company given Universal Music the ability to take down infringing content, but to do so without oversight.

YouTube allows the labels to do that because it struck a distribution deal with them, but why would Soundcloud follow suit? News today suggests that this particular question answers itself.

According to a Bloomberg, Universal Music, Sony Music Entertainment and Warner Music Group are “closing in” on a deal with Soundcloud which will see the service obtain licenses to host and distribute content from these major labels.

An anonymous source familiar with the negotiations said that the deal will not only see the labels getting a share of future Soundcloud revenue, but Universal, Sony and Warner each picking up a 3% to 5% stake in the business.

On top of that and most importantly, Berlin-based Soundcloud will receive assurances that it won’t get sued, a valuable stability that US-rival Grooveshark is unlikely to enjoy anytime soon.

No one involved in the talks is speaking on the record, but sources suggest that the agreement would value Soundcloud between $500 million and $600 million, not bad for company that was nibbling at the heels of MySpace just five years ago.

The 200 employee company is definitely on the up. One year ago Soundcloud reported having 200 million unique users, but by November 2013 that had increased to 250 million.

A target of one billion users leaves Soundcloud with plenty to do, but with the threat of large-scale litigation off the table, the process will be much, much easier.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

This also happens at SoundCloud, which in recent years became one of the most popular services for people to share music.

As a legitimate service, SoundCloud helps copyright holders by accepting takedown requests. However, in some cases SoundCloud goes a step further.

This is what DJ Mr Brainz discovered after his paid account was terminated due to repeated copyright infringements. Mr Brainz used SoundCloud to post copies of his radio show, which he believes drives more sales, but Universal Music disagreed and took down his files.

To find out more about the alleged infringements the DJ asked SoundCloud for additional details, as Do Androids Dance reports. Quite surprisingly, however, SoundCloud couldn’t provide more information as the removals were carried out by Universal music directly.

“Your uploads were removed directly by Universal. This means that SoundCloud had no control over it, and they don’t tell us which part of your upload was infringing. If you look at your tracklist it may help you find the Universal content they wanted blocked,” SoundCloud’s copyright team explained.

“The control of removing content is completely with Universal. This means I can’t tell you why they removed your uploads and not others, and you would really need to ask them that question,” the SoundCloud representative adds.

In other words, SoundCloud grants Universal Music the power to delete any and all content they deem to be infringing. This apparently happens without oversight or any record of what’s being taken down.

This blanket removal power is especially problematic since the affected users don’t know what they have done wrong. Without any details on the allegedly infringed track, it’s pretty much impossible to file a counter notice.

These type of broad takedown powers are not unique to SoundCloud. Previously YouTube has come under fire because the company allowed record labels to remove “disrespectful” videos or other non-infringing files the labels deemed inappropriate.

The recent issues at SoundCloud are not an isolated incident either. Over the past several months many users have complained about an avalanche of takedown notices. After America’s DJ Kaskade had 70 percent of his SoundCloud tracks removed due to alleged copyright infringements, he said he would start his own music sharing site instead.

“I will move forward with constructing my own portal where I can share what I like when I like,” Kaskade said.

Despite the critique SoundCloud sees no wrongdoing. The company points out that users are free to dispute any inaccurate takedowns. Unfortunately that’s easier said than done.

It is clear that SoundCloud is putting its users at a significant disadvantage here.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.