Online music sharing service SoundCloud Ltd is close to a deal with Universal Music Group, Sony Music Entertainment, and Warner Music Group for licenses to continue playing their songs and avoid potential legal disputes, Bloomberg reported citing people with knowledge of the matter.

SoundCloud is in return negotiating offering a 3 percent to 5 percent stake to the companies as well as a percentage of future revenue, the website reported.

SoundCloud is a platform that enables people to upload, record, promote, and share their music and other audio files.

If the deal goes through, SoundCloud would be valued between $500 million and $600 million, Bloomberg reported. (bloom.bg/1nctD95)

The service will pay the record labels based on how many times a song is played until the company's revenue crosses a certain threshold, the report said.

Twitter Inc was also in talks to acquire the Berlin-based startup earlier this year as it sought to add a music service to its offerings.

SoundCloud and Sony Music, a unit of Sony Corp, could not immediately be reached for comment outside regular U.S. business hours. Warner Music, a subsidiary of privately held American conglomerate Access Industries, and Universal Music, the music entertainment arm of Vivendi SA, could also not immediately be reached for comment.