SoundCloud is one of today's most prominent music streaming sites on the planet. At an impressive 175 million listeners, visitors can browse through a massive 135 million-track database. Unfortunately, these stats alone may not be enough for the orange cloud company to meet its bottom-line.
Founders: Alexander Ljung (CEO) & Eric Wahlforss (CTO)
Year Founded: Sept. 2007
Launch date: Oct. 2008
Hometown: Stockholm, Sweden
Headquarters: Berlin, Germany
Active users: 175 Million (250K Go Subscriptions)
Most recent valuation: $500M (Google)
So What's Actually Going On?
You may have noticed that SoundCloud has been receiving a bit of attention in the news lately. Some reports are even suggesting SoundCloud may run out of money by the end of the year. This is mostly due to the fact that a report broke from MusicBusinessWorldwide earlier this month, claiming that the now Berlin-based Swedish company lost a staggering $52 million in 2015. Even though the company has spoken out in the time since, this has raised many eyebrows at the tenuous future of the music-first social networking site.
A SoundCloud spokesperson stated that most of the losses from 2015 resulted in a push towards ads and preparation for the rollout of SoundCloud Go early last year in March. The representative continued to suggest that the advent of advertisements and Go has led to more hopeful earnings in 2016, though actual figures were left out of the statement.
Over the years, I have developed some history with the site. I have been a loyal SoundCloud user since 2011, back when the site still had a predominately (and not not-so-sexy) blue and white interface. As an amateur music producer, I started using SoundCloud as a means to more easily share my music with my early fans (i.e., friends and family on Facebook). I wasn't a fan of the cluttered and overly-complicated feel of alternative services, such as Soundclick, especially since my primary focus was not on selling beats.
I have (mostly) supported the various features SoundCloud has rolled out throughout my membership. As the company started to grow, however, I started to notice a shift in the intent of these features. Perhaps not in every way, I noticed a change in focus from being on the creators (such as myself) or even the listeners (such as my fans) to the industry. For me, this is when SoundCloud sailed forth into choppy waters. SoundCloud began pandering to the industry in efforts of attracting bigger artists to their services. They started rolling out stricter copyright policies and removing previous artist mixes (for DJs, this was awful). They slowly began to transition from being a user-generated service to a celebrity-generated service.
As an individual who believes every situation has a pro and a con, I understand why SoundCloud wanted to appease the industry. The philosophy of having more superusers on the site—the bigger the star, the more listeners, in hopes that their fans would flock to the service—makes sense. SoundCloud is a private business, so, if not in revenue, SoundCloud needed a strong user base to continue to raise funding. The downside to this was, however, as more people joined, the company began thinking of ways of have to make money from these new listeners, often at the expense of ignoring the benefits once received from long-time users. Advertisements were one example of this.
It was a sad day the first time I heard an advertisement on SoundCloud. I knew, at that moment, SoundCloud was making a bold statement regarding the shift towards a profit-first service instead of a user-first one. It wasn't long after when I encountered my first preview on SoundCloud. Of course, I'm talking SoundCloud Go. Some artists of a certain clout made the shift from hosting free tracks to only allowing previews to non-Go subscribers. Though these weren't artists I particularly listened to on a regular basis, there was something saddening about the fact that artists, given enough success, would have the ability to make people pay for the service that, in many cases, made them who they are.
In all fairness, not every major artist has decided to force Go upon their listeners. Kanye West, Chance the Rapper, and even Childish Gambino have allowed either singles or full albums to be streamed for free by listeners (perhaps only at the expense of ads, similar to YouTube).
The Fate of SoundCloud (Conclusion)
I do not write this in total hopelessness of SoundCloud's future. With such a strong user base, I'd hate to see the empire collapse. Instead, I hope CEO Alexander Ljung, in addition to his 300 employees, can work something out with the always-thirsty-but-never-satisifed record labels. Despite everything I've said, perhaps that is what the true focus should be on.
Let me know if you agree, disagree, or feel as though there were any important points I've left out in the comments below. As always, don't forget to subscribe.
Catch you on the next post,