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Is SoundCloud The New MySpace? Recently Released Directors’ Report Indicates The Popular Platform Is Bleeding Money

By Kaanii Powell Cleaver
Published on: 18:11 PST, Feb 22, 2016

The internet is abuzz with doom-and-gloom reports about the precarious financial status of SoundCloud. On February 18, Tech Times reported that the international audio distribution platform is deeply in debt, having hemorrhaged more than $40 million in the fiscal year 2014. Wired names the sum of SoundCloud losses in excess of $44 million.

Both of the aforementioned reports are based on a financial statement that SoundCloud Ltd. filed in the UK last week. Granted, the SoundCloud Ltd. directors’ report and consolidated financial statement referred to describes financial data that is now more a year old, but it does open the door to questions about the company’s stability.

What in the world is going on at SoundCloud?

DigitalTrends indicates some 175 million registered SoundCloud members use the platform to share more than 110 million audio tracks with each other and the world. From 2007 until 2014, registered users could upload and share audio on the site for free. In 2014, the worldwide streaming service introduced an ad-funded tier of service featuring Warner Music Group as the first major SoundCloud advertiser. They probably won’t be the last. As of 2016, SoundCloud boasts more than 100 advertising partners and is actively wooing a number of new advertisers in anticipation of the audio-sharing platform’s revamped paid service policies.

A spokesperson for SoundCloud spoke to Billboard about the company’s plans.

“We are in ongoing conversations with major and independent labels and will continue to add partners to the program. We’ve always put control in the hands of creators, and anyone who makes music and audio can decide when and how they want to share it with fans, allowing artists to essentially broadcast out to the world the availability of new content.”

One reason SoundCloud has remained afloat despite staggering losses is capital investment. As reported by Music Business Worldwide, The Chernin Group and US-based Institutional Venture Partners (IVP) each contributed an undisclosed sum to SoundCloud’s coffers in 2014. According to the same source, SoundCloud investors contributed a hefty $77 million in funds to the cash-starved company the next year. In 2015, Twitter considered and subsequently rejected the idea of making an all-out purchase of SoundCloud, according to Digital Trends.

In response to the recent flurry of worry about SoundCloud, the company made the following comment.

“We’re focusing on enabling creators to get paid for their creativity and on building a financially sustainable platform that our community can enjoy for years to come.”

What does the near future hold for the music makers and podcasters who use SoundCloud to store and share their audio creations? Music Business Worldwide suggests that anyone who currently uses the streaming service for free get used to the idea of paying for a SoundCloud subscription. Wired recommends that SoundCloud users be ready to start uploading their music and podcasts to alternative streaming services such as Bandcamp and YouTube.

In 2016, SoundCloud will launch a paid subscription service that may or may not save the popular platform from going the way of the now-extinct Grooveshark or the once-booming, now relatively obscure, MySpace.

In Other SoundCloud News

Last November, SoundCloud launched a new mobile app that allows music creators to upload and share songs privately and publicly, view performance statistics, and interact with listeners via comments. At the time of this writing, SoundCloud Pulse is available only for Android devices, but a fully functional iOS app is on the horizon.

Billboard notes similar app releases by SoundCloud rivals Pandora, YouTube, and Spotify with AMP, YouTube for Artists, and Insights, respectively.

On February 22, SoundCloud enacted a number of changes to their Terms of Use and privacy policies. Updates included an option to register with SoundCloud via Facebook in lieu of an email address and clarification regarding territorial restrictions.

Founded in Sweden in 2007 by Eric Wahlforss and Alexander Ljung, SoundCloud Inc. is currently headquartered in Berlin and registered in London. The privately-owned company employs nearly 300 people in Germany, Great Britain, New York, and San Francisco.

[Image via ChinaFotoPress / Getty Images]

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