In the past, SoundCloud has been getting away with legal freedom, but unfortunately it appears that all good things come to an end. According to a few sources, SoundCloud is engaged in serious licensing discussions with major labels and publishers. The reason why now, is still unknown.
SoundCloud has been operating under the Digital Millennium Copyright Act (DMCA) loophole which grants immunity to sites with third-party, user-uploaded content. Right now unless the song is flagged by the content owner, SoundCloud will stay away from any legalities of the song.
According to the source, many major labels are upset their catalog is all over SoundCloud and it's becoming too difficult to police their content on the music sharing platform.
“SoundCloud doesn’t want to start that because they could get completely flooded [with DMCA takedown demands]. And that’s just one way [the major labels] will start a war.”
We're still not sure if this licensing will affect remixes, mixes or just people uploading originals by the original artist. We believe it'll be like the original songs uploaded to SoundCloud like below:
[Source: Digital Music News]