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In The New Age Of Music Streaming, Soundcloud Says They're Doing Fine And Looking For Investors

Soundcloud used to be a platform where the hottest artists and biggest DJs would upload their latest singles for their followers to get first dibs on new or experimental tracks.

This is a platform once dubbed the “YouTube for music”, but fast forward to 2017, and Soundcloud has largely drifted away from that title even though it still does the same things.

The Soundcloud Story

Hailing from Germany, it was founded by Alexander Ljung and Eric Wahlforss, and counts itself as one of the many success stories to have come out of that country, along with the likes of foodpanda.

Long before paid subscriptions became a thing, Soundcloud had a model similar to YouTube but specifically for audio tracks – everything was free to listen to as long as you registered for an account.

Soundcloud screenshot

Here was a platform on which you could listen to songs and remixes, but mainstream artists are not why some people are still on it today – it’s their vast library of independent artists and podcasts that have developed a cult following.

Even then, as technology progressed, disruption followed, and with it came the almost impossible task of staying as a free-to-listen platform.

What Happened To Soundcloud?

Well, mainstream music streaming subscription happened.

First it was Spotify, then Apple Music, and with them came the ability to discover indie musicians on their platform.

That, and guaranteeing that users gain access to the latest hit songs on-demand anywhere, across smartphones and computers.

Image Credit: Flickr

Soundcloud is by no means dead, but at the rate that its value is going down, it may as well be.

3 years ago, they were valued for reported US$700 million. Then came another US$70 million through an investment made by Twitter.

Now though, it seems that the music streaming company can be sold for as little as US$250 million.

This was a company that some have said will be worth more than Spotify, yet near the end of 2016, Spotify entered into a discussion to potentially acquire Soundcloud.

That of course didn’t happen, as Spotify instead acquired Sonalytic from the UK recently.

Going Into Paid Subscriptions

Soundcloud has been bleeding a lot of money for some time, and struggled to maintain a proper revenue stream.

In search of funds, they turned to paid subscriptions to better position themselves against the likes of Spotify and Apple Music.

Soundcloud
Soundcloud Go app

Costing US$9.99 per month, it was made possible due to them striking agreements with music labels such as Universal Music and Sony Music. The service was only available in three markets, namely the Unites States, United Kingdom, and Germany.

And it seems that things are not going as well as planned since its launch last year.

At the end of February, Soundcloud launched an additional plan at half the price, adding more countries into the mix – Ireland, France, Canada, Australia, and New Zealand.

The very selective market reach will definitely affect user figures for Soundcloud, and the lack of a more international reach will have a larger impact on bringing in revenue.

Is It The End In 2017?

This gambit could very well be Soundcloud’s last chance to raise enough money to continue to even exist.

Earlier in January, it was reported that Soundcloud may only have enough to continue operation for the year.

Beyond 2017 though is anyone’s guess.

That’s not to say that they’re not doing anything about it. The latest update comes from a statement they released to Billboard (and other news sites) where they mentioned that they have recently appointed a new CFO, Holly Lim, who will lead the search for new investors.

That, coupled with “unmatched user reach and strong outlook for 2017” mainly driven by their subscription services will generate a 2.5x year on year growth.

While it is definitely good news that Soundcloud will be sticking around for longer, it remains to be seen how much more they can actually grow.

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