Smashdad, the issue isn't Soundcloud here, it's uploading content you don't own the rights to, which is what areas of the industry are waking up to. OK, it took them six years, but that's been six glorious years of freedom. The reason SC can't stick it, or stand-up to any label that can prove ownership of a track is because they simply don't have a leg to stand on. And they didn't open the box or create this problem; as I said in the other thread, it was designed as a showcase for unsigned artists and bands and got hijacked by DJs and producers due to it's functionality.
Yes, you're right, the dance community does, for the most part, tolerate use of tracks as part of a mix because within this genre it works as a marketing tool, but that doesn't make it legal. It only takes one label in a mix of, say, fifteen tracks to complain and the whole thing obviously has to come down. And yes, you're right, people will migrate away from Soundcloud, the only reason we're debating them is because it is currently the market leader and therefore the one in the spotlight on both sides of the fence - label and consumer; but don't fool yourself to thinking the majors will only be picking on SC right now, they'll be searching hard for an industry wide solution to the problem (as they see it).
So, if they do succeed (and I admit the premise is based on an industry wide lock down on unlicensed content being used in mixes), how could demand for properly licensed product not increase? I'm not convinced they will be able to get the genie back in the bottle in its entirety, I kinda agree with you there too, but then they may not have to, the average consumer is nothing like as musically enlightened as the members of this board.