Music Biz: SoundCloud Might Be SHUTTING DOWN? Chance the Rapper to HELP?
- Thread starter playahaitian
- Start date
The Potential Death of SoundCloud Should Scare Music Lovers
By Brian FeldmanShare
TechCrunch reported that in an all-hands meeting this month concerning layoffs that affected 40 percent of the company’s staff, management revealed that the site only had enough runway left to get them to Q4 of this year. That’s only 50 days from now. (SoundCloud disputed the figure, telling the site it was “fully funded into Q4” and speaking with investors.)
It’s one thing if the end of SoundCloud simply meant the discontinuation of one way to listen to music — there are plenty of other ways to stream audio online, including YouTube itself. But SoundCloud hosts music, and its disappearance would mean the simultaneous disappearance of hundreds of thousands of hours of audio — music, podcasts, radio shows, random gobbledygook, all stored on SoundCloud’s no-doubt expensive servers. Just as importantly, the website’s demise would mean the end of a scene: SoundCloud is the birthplace of its own genre and musical community, a DIY branch of hip-hop so closely identified with the website that most people call it SoundCloud rap.
ADVERTISING
SoundCloud rap has gotten important enough for the New York Times to call it “the most vital and disruptive new movement in hip-hop” in a report just last month. But without SoundCloud, it’s unclear what would happen to SoundCloud rap, which has taken advantage of the platform’s bare-bones ease of use and free hand. In important ways, the service is the uncontested most popular music platform, in a very literal sense of popular. It’s for anyone, with a lower barrier to entering, uploading, sharing, and commenting than any other music service.
You might wonder why a hugely popular, culturally important service is failing, but like everything, it comes down to money: SoundCloud has never really figured out how to extract money from its users, both creators and consumers.
We’ve written before about how difficult it can be to create sustainable business models off of creative platforms. The platforms that have often been the most effective at generating lasting digital culture — images, ideas, videos, memes — have often struggled to find a sustainable business model. Creativity can often breed a kind of forbidding insularity that stunts growth. Supporting often wild platforms with ad sales doesn’t seem to cut it. Not just wild, but sometimes legally dicey: Hip-hop samples and DJ remixes pose copyright problems for the music industry, which is already famously convoluted when it comes to licensing and copyright.
It’s not that SoundCloud didn’t try to make money. On the creator side, SoundCloud offers hosting plans that range from free (three hours of hosted audio) to $15 a month (unlimited). Unfortunately, when your target customer is a young, independent musician, the pricing could be a significant barrier to entry. Less compelling content means fewer people who want to listen to it. Some analysts, according to TechCrunch, say SoundCloud monthly streams have fallen to half of what they once were. The consumer side is less appealing: The service offers Soundcloud Go, $5 and $10 tiers that do things like eliminate interstitial advertising. But the platform lacks the sheer breadth of a catalogue like Spotify or Apple’s streaming services, making it an uncompelling option for music fans looking for the latest and greatest.
That these pricing options didn’t work — and that so far the internet hasn’t been able to make creative platforms profitable — doesn’t mean that SoundCloud could never work. One thing that’s become clear in the last few years is that fervent fandoms are much more willing to directly support artists they value than they are to pay blanket fees for broad services. Compare SoundCloud to the music marketplace Bandcamp, which also offers artists free streaming options, or a streaming site like Twitch. Both of those sites, and others, give users the option to pay money directly to content creators, either for downloadable MP3s, or in a monthly subscription. In exchange, the services take a small portion of the proceeds for themselves. There’s plenty of evidence that a user will pay $5 a month for content if they know exactly who’s on the receiving end. With SoundCloud’s model, users were just throwing money into a big pot and hoping their favorite musicians got some revenue from audio ads and subscription fees.
Even with a smarter business model, SoundCloud would face problems. It’s a platform that’s all about audio, a media format which is uniquely hobbled when it comes to going viral; as Stan Alcorn explained on Digg in 2014, audio has trouble going viral the way video does because we tend to listen to it in contexts where sharing is impossible, and because it’s impossible to skim or preview. And issues with copyright and sample clearance will never go away.
But the lesson to take away from the SoundCloud crisis isn’t just that creative businesses are difficult to sustain online, or that the company wasn’t quick enough to find a lasting revenue stream. It’s that as we move creative scenes from cities and neighborhoods and onto the web, we outsource the publishing, storage, and archiving of their products to young, for-profit businesses — and therefore run the very serious risk of losing huge and important libraries of culture to the vagaries of a new and quickly moving economy. Thinking about SoundCloud it’s hard not to be reminded of Vine, the hugely influential video-sharing app that was unceremoniously shut down by Twitter last year: Not only did the web lose one of its most vibrant spaces, any videos that disappeared from the service were gone forever. It’s not an accident, either, that, like Vine, SoundCloud’s culture is primarily steered by nonwhite contributors.
It’s true that SoundCloud might still be saved — it could be acquired by a larger company, or it could secure a loan or more investment. Chance the Rapper tweeted “I’m working on the SoundCloud thing” this afternoon, so maybe he can fix it. But while new owners or new investment might save SoundCloud the business, they wouldn’t necessarily make the archive safe.
This week’s news has artists and music fans warning each other across the web to make offline backups of stuff that they like, lest the service go belly-up, spawning a constellation of dead hyperlinks. That might save some of the content — but only a complete archive would preserve the SoundCloud scene, from the genius to the terrible, for future academics, musicians, and fans. Unfortunately, absent some funding geared toward that essentially charitable act, such complete archiving is likely out of the question. According to Jason Scott of the nonprofit Internet Archive, SoundCloud’s repository of audio is a petabyte of data — one million gigabytes — and would cost $1.5 million to $2 million to host for the foreseeable future. Maybe they should give Chance the Rapper a call.
http://nymag.com/selectall/2017/07/soundcloud-shutting-down-what-happens-to-the-music.html
By Brian FeldmanShare
TechCrunch reported that in an all-hands meeting this month concerning layoffs that affected 40 percent of the company’s staff, management revealed that the site only had enough runway left to get them to Q4 of this year. That’s only 50 days from now. (SoundCloud disputed the figure, telling the site it was “fully funded into Q4” and speaking with investors.)
It’s one thing if the end of SoundCloud simply meant the discontinuation of one way to listen to music — there are plenty of other ways to stream audio online, including YouTube itself. But SoundCloud hosts music, and its disappearance would mean the simultaneous disappearance of hundreds of thousands of hours of audio — music, podcasts, radio shows, random gobbledygook, all stored on SoundCloud’s no-doubt expensive servers. Just as importantly, the website’s demise would mean the end of a scene: SoundCloud is the birthplace of its own genre and musical community, a DIY branch of hip-hop so closely identified with the website that most people call it SoundCloud rap.
ADVERTISING
SoundCloud rap has gotten important enough for the New York Times to call it “the most vital and disruptive new movement in hip-hop” in a report just last month. But without SoundCloud, it’s unclear what would happen to SoundCloud rap, which has taken advantage of the platform’s bare-bones ease of use and free hand. In important ways, the service is the uncontested most popular music platform, in a very literal sense of popular. It’s for anyone, with a lower barrier to entering, uploading, sharing, and commenting than any other music service.
You might wonder why a hugely popular, culturally important service is failing, but like everything, it comes down to money: SoundCloud has never really figured out how to extract money from its users, both creators and consumers.
We’ve written before about how difficult it can be to create sustainable business models off of creative platforms. The platforms that have often been the most effective at generating lasting digital culture — images, ideas, videos, memes — have often struggled to find a sustainable business model. Creativity can often breed a kind of forbidding insularity that stunts growth. Supporting often wild platforms with ad sales doesn’t seem to cut it. Not just wild, but sometimes legally dicey: Hip-hop samples and DJ remixes pose copyright problems for the music industry, which is already famously convoluted when it comes to licensing and copyright.
It’s not that SoundCloud didn’t try to make money. On the creator side, SoundCloud offers hosting plans that range from free (three hours of hosted audio) to $15 a month (unlimited). Unfortunately, when your target customer is a young, independent musician, the pricing could be a significant barrier to entry. Less compelling content means fewer people who want to listen to it. Some analysts, according to TechCrunch, say SoundCloud monthly streams have fallen to half of what they once were. The consumer side is less appealing: The service offers Soundcloud Go, $5 and $10 tiers that do things like eliminate interstitial advertising. But the platform lacks the sheer breadth of a catalogue like Spotify or Apple’s streaming services, making it an uncompelling option for music fans looking for the latest and greatest.
That these pricing options didn’t work — and that so far the internet hasn’t been able to make creative platforms profitable — doesn’t mean that SoundCloud could never work. One thing that’s become clear in the last few years is that fervent fandoms are much more willing to directly support artists they value than they are to pay blanket fees for broad services. Compare SoundCloud to the music marketplace Bandcamp, which also offers artists free streaming options, or a streaming site like Twitch. Both of those sites, and others, give users the option to pay money directly to content creators, either for downloadable MP3s, or in a monthly subscription. In exchange, the services take a small portion of the proceeds for themselves. There’s plenty of evidence that a user will pay $5 a month for content if they know exactly who’s on the receiving end. With SoundCloud’s model, users were just throwing money into a big pot and hoping their favorite musicians got some revenue from audio ads and subscription fees.
Even with a smarter business model, SoundCloud would face problems. It’s a platform that’s all about audio, a media format which is uniquely hobbled when it comes to going viral; as Stan Alcorn explained on Digg in 2014, audio has trouble going viral the way video does because we tend to listen to it in contexts where sharing is impossible, and because it’s impossible to skim or preview. And issues with copyright and sample clearance will never go away.
But the lesson to take away from the SoundCloud crisis isn’t just that creative businesses are difficult to sustain online, or that the company wasn’t quick enough to find a lasting revenue stream. It’s that as we move creative scenes from cities and neighborhoods and onto the web, we outsource the publishing, storage, and archiving of their products to young, for-profit businesses — and therefore run the very serious risk of losing huge and important libraries of culture to the vagaries of a new and quickly moving economy. Thinking about SoundCloud it’s hard not to be reminded of Vine, the hugely influential video-sharing app that was unceremoniously shut down by Twitter last year: Not only did the web lose one of its most vibrant spaces, any videos that disappeared from the service were gone forever. It’s not an accident, either, that, like Vine, SoundCloud’s culture is primarily steered by nonwhite contributors.
It’s true that SoundCloud might still be saved — it could be acquired by a larger company, or it could secure a loan or more investment. Chance the Rapper tweeted “I’m working on the SoundCloud thing” this afternoon, so maybe he can fix it. But while new owners or new investment might save SoundCloud the business, they wouldn’t necessarily make the archive safe.
This week’s news has artists and music fans warning each other across the web to make offline backups of stuff that they like, lest the service go belly-up, spawning a constellation of dead hyperlinks. That might save some of the content — but only a complete archive would preserve the SoundCloud scene, from the genius to the terrible, for future academics, musicians, and fans. Unfortunately, absent some funding geared toward that essentially charitable act, such complete archiving is likely out of the question. According to Jason Scott of the nonprofit Internet Archive, SoundCloud’s repository of audio is a petabyte of data — one million gigabytes — and would cost $1.5 million to $2 million to host for the foreseeable future. Maybe they should give Chance the Rapper a call.
http://nymag.com/selectall/2017/07/soundcloud-shutting-down-what-happens-to-the-music.html
Breaking: SoundCloud’s CEO Officially Responds to Bankruptcy Shutdown Rumors
Paul Resnikoff
July 14, 2017
6
Alex Ljung of SoundCloud (photo: Stuart Isett/Fortune Brainstorm Tech)
SoundCloud CEO Alex Ljung is battling back against persistent shutdown rumors. That includes information pointing to a near-term shutdown of the entire operation within 50 days. Just last week, the company laid off 173 employees and shut down two offices. Lavish offices, pricey employee perks, and expensive licensing deals with persistent losses were blamed.
Just this afternoon, the embattled chief issued this official statement.
________________________________________________________________
SoundCloud is here to stay.
Hey everyone,
There’s an insane amount of noise about SoundCloud in the world right now. And it’s just that, noise. The music you love on SoundCloud isn’t going away, the music you shared or uploaded isn’t going away, because SoundCloud is not going away. Not in 50 days, not in 80 days or anytime in the foreseeable future.
Your music is safe.
Along with each of you, we’ve built this incredible creative community of artists, podcasters, DJs, producers and more who are the driving force in pushing culture forward in the world. That’s not going to change. Last week we had to make some tough decisions to let go of some of our staff, but we did this to ensure SoundCloud remains a strong, independent company.
Thank you for the outpouring of love and support. Some of you have asked how you can help – spread the word that we’re not going anywhere and keep doing what you’re doing – creating, listening, uploading, sharing, liking, and discovering what’s new, now and next in music.
SoundCloud is here to stay.
Peace,
Alex
________________________________________________________________
Unfortunately, Ljung’s war against publications like the Financial Times and TechCrunch have sharply eroded his credibility. That includes a blistering attack against the Financial Times as ‘fake news,’ despite the publication’s information about the platform being accurate.
Just this week, Ljung blasted back against a Techcrunch story that now seems spot-on.
Separately, Ljung has apparently reached out to Chance the Rapper, assuring him with the site isn’t shutting down. But exactly why Chance was getting involved remains uncertain.
Inside the remaining offices, employees are reportedly weighing all of their options as the future remains highly uncertain.
Here’s the latest from Digital Music News’ breaking coverage of the worsening situation:
Thursday (July 13th): SoundCloud Has Just 50 Days to Live…
Friday (July 14th): How to Protect Your SoundCloud Collection Before It Goes ‘Poof’
Friday (July 14th): Is Chance the Rapper About to Save SoundCloud?
Wednesday (July 12th): Here’s a Spreadsheet of 150 Ex-SoundCloud Employees
Paul Resnikoff
July 14, 2017
6
Alex Ljung of SoundCloud (photo: Stuart Isett/Fortune Brainstorm Tech)
SoundCloud CEO Alex Ljung is battling back against persistent shutdown rumors. That includes information pointing to a near-term shutdown of the entire operation within 50 days. Just last week, the company laid off 173 employees and shut down two offices. Lavish offices, pricey employee perks, and expensive licensing deals with persistent losses were blamed.
Just this afternoon, the embattled chief issued this official statement.
________________________________________________________________
SoundCloud is here to stay.
Hey everyone,
There’s an insane amount of noise about SoundCloud in the world right now. And it’s just that, noise. The music you love on SoundCloud isn’t going away, the music you shared or uploaded isn’t going away, because SoundCloud is not going away. Not in 50 days, not in 80 days or anytime in the foreseeable future.
Your music is safe.
Along with each of you, we’ve built this incredible creative community of artists, podcasters, DJs, producers and more who are the driving force in pushing culture forward in the world. That’s not going to change. Last week we had to make some tough decisions to let go of some of our staff, but we did this to ensure SoundCloud remains a strong, independent company.
Thank you for the outpouring of love and support. Some of you have asked how you can help – spread the word that we’re not going anywhere and keep doing what you’re doing – creating, listening, uploading, sharing, liking, and discovering what’s new, now and next in music.
SoundCloud is here to stay.
Peace,
Alex
________________________________________________________________
Unfortunately, Ljung’s war against publications like the Financial Times and TechCrunch have sharply eroded his credibility. That includes a blistering attack against the Financial Times as ‘fake news,’ despite the publication’s information about the platform being accurate.
Just this week, Ljung blasted back against a Techcrunch story that now seems spot-on.
Separately, Ljung has apparently reached out to Chance the Rapper, assuring him with the site isn’t shutting down. But exactly why Chance was getting involved remains uncertain.
Inside the remaining offices, employees are reportedly weighing all of their options as the future remains highly uncertain.
Here’s the latest from Digital Music News’ breaking coverage of the worsening situation:
Thursday (July 13th): SoundCloud Has Just 50 Days to Live…
Friday (July 14th): How to Protect Your SoundCloud Collection Before It Goes ‘Poof’
Friday (July 14th): Is Chance the Rapper About to Save SoundCloud?
Wednesday (July 12th): Here’s a Spreadsheet of 150 Ex-SoundCloud Employees
https://www.wired.com/2017/04/soundcloud-crossroads/
THE PAST YEAR has been good to streaming music services. Spotify recently reached 50 million paying subscribers; Apple Music, while growing more slowly, has more than 20 million. And together, the two platforms have contributed to an unusually robust 2017 for hip-hop albums. Migos' album *Culture *became the Atlanta group's first album to debut at #1—with 59 percent of its sales equivalent coming from streaming. More recently, Drake and Kendrick Lamar set streaming records with their latest albums: According to Billboard, Drake's More Life and Lamar's DAMN. each sold more than a quarter-million "streaming equivalent albums." All of which makes you feel kinda bad for SoundCloud.
The Berlin-based company is still searching for a buyer to help its financial woes. A few months ago, two of its top executives left. And hip-hop's biggest artists, all of whom once shared their music readily on SoundCloud, no longer use the platform like they once did. But while it might be a bit too early to start printing obituaries, SoundCloud—and the 175 million people who use it every month—still stands at a crossroads. The question is, where does it go from here?
From Backpacks to Bitmoji
From its earliest days, SoundCloud was a boon to independent artists, especially rappers. When it launched in 2007, the #1 song in the country was Soulja Boy's "Crank That"—itself a product of YouTube and MySpace, which at the time were the biggest online discovery engines in music. However, both those platforms had critical pain points. First, it was difficult to get YouTube plays if you didn't have a video to accompany the song; second, with the arrival of Facebook, MySpace had become dangerously passé. SoundCloud solved those problems: it made audio-only music sharing both frictionless and cool (or at least not entirely uncool).
Moreover, the independent nature of SoundCloud aligned perfectly with the culture of hip-hop—an artform that has historically challenged the status quo and fought for more self-control. "SoundCloud addresses the tension that artists once felt in navigating gatekeepers and other barriers to entry. Label ownership and radio were once the only outlets to get heard," says Casey Rae, a music and media professor at Georgetown University. Before long, "SoundCloud rapper" had become a term of its own. (Granted, it was often pejorative, much like "internet rapper" in the '00s and "backpack rapper" in the '90s, but its very existence speaks to a thriving ecosystem of bootstrapping artists.)
ADVERTISEMENT
And over time, the platform became home not just to DIY artists, but successful DIY artists. Chance The Rapper released his first two mixtapes,10 Days and Acid Rap, on SoundCloud. His Grammy award-winning album Coloring Book was SoundCloud's most streamed album in 2016. D.R.A.M.'s "Cha Cha" became a viral hit; Post Malone's "White Iverson" got the artist a record deal—and ultimately a platinum album. In 2016 Lil Uzi Vert leveraged SoundCoud to gain more new followers than any other artist; now the Atlanta upstart earns upwards of $45,000 per show.
Yet, the company's onetime $700 million valuation has declined precipitously. "SoundCloud is facing three primary pressures," Rae says. "It has to grow past a certain threshold even though growth will naturally plateau; manage high expectations from investors; and rely on a business model that requires them to pay at least 70% of available revenue to content license holders." That's a lot of boxes to check off—and while Apple and Spotify are bringing in users by the millions, SoundCloud Go, the company's premium paid subscription option, has yet to disclose its subscription numbers since it launched in 2016. Even if those numbers turn out to be astronomical, though, they might not save the company.
The silver lining for SoundCloud is that the entire music streaming industry is still finding its way. None of its pure-play competitors—Pandora, Spotify, or TIDAL—are profitable. Streaming exclusives, once seen as a market differentiator for companies willing to pony up, are falling out of vogue: Both Kendrick Lamar's *DAMN. *and Drake's More Life were multiplatform releases. In fact, More Lifesold and streamed better than Drake's 2016 Apple Music-exclusive Views, which could could influence how other artists will prospect exclusive opportunities. What SoundCloud needs is a way to turn that silver lining into sunshine.
Leveraging Loyalty
One possibility would be for more "alumni" promote the service. A few weeks ago, Chance The Rapper hosted Magnificent Coloring World 2, a private event for fans where he only invited the top .001% of his listeners on SoundCloud. When Chance advocates for SoundCloud above all platforms—despite selling and streaming his music everywhere—it generates goodwill for the company and could lead to additional revenue opportunities.
With more cash, SoundCloud could follow the lead of other streaming services and produce its own content. Apple Music's Beats 1, which also hosts celebrity DJs and releases artist exclusives, landed the first interview with Kendrick Lamar after DAMN. dropped. Spotify answered Beats 1 by supercharging its popular RapCaviar playlist: Last week, the playlist celebrated 4/20 by inviting Wale to discuss hip-hop culture while eating gourmet cannabis edibles. Neither is an exclusive album, but it's valuable original content that can draw users.
SoundCloud is like a startup incubator: it gives artists basic tools and exposure for early-stage growth. Unlike an incubator, it lacks equity stake or monthly rental fees to generate revenue directly from artists. It's a challenging position, but with the intriguing opportunities for SoundCloud and the ever-changing music streaming sector, it's too early to declare defeat. "If SoundCloud went away, there's a piece that would be lost in the culture," Rae says. "Where do [the artists] go if SoundCloud can't maintain operations?" Besides, "Bandcamp rapper" doesn't have the same ring to it.
THE PAST YEAR has been good to streaming music services. Spotify recently reached 50 million paying subscribers; Apple Music, while growing more slowly, has more than 20 million. And together, the two platforms have contributed to an unusually robust 2017 for hip-hop albums. Migos' album *Culture *became the Atlanta group's first album to debut at #1—with 59 percent of its sales equivalent coming from streaming. More recently, Drake and Kendrick Lamar set streaming records with their latest albums: According to Billboard, Drake's More Life and Lamar's DAMN. each sold more than a quarter-million "streaming equivalent albums." All of which makes you feel kinda bad for SoundCloud.
The Berlin-based company is still searching for a buyer to help its financial woes. A few months ago, two of its top executives left. And hip-hop's biggest artists, all of whom once shared their music readily on SoundCloud, no longer use the platform like they once did. But while it might be a bit too early to start printing obituaries, SoundCloud—and the 175 million people who use it every month—still stands at a crossroads. The question is, where does it go from here?
From Backpacks to Bitmoji
From its earliest days, SoundCloud was a boon to independent artists, especially rappers. When it launched in 2007, the #1 song in the country was Soulja Boy's "Crank That"—itself a product of YouTube and MySpace, which at the time were the biggest online discovery engines in music. However, both those platforms had critical pain points. First, it was difficult to get YouTube plays if you didn't have a video to accompany the song; second, with the arrival of Facebook, MySpace had become dangerously passé. SoundCloud solved those problems: it made audio-only music sharing both frictionless and cool (or at least not entirely uncool).
Moreover, the independent nature of SoundCloud aligned perfectly with the culture of hip-hop—an artform that has historically challenged the status quo and fought for more self-control. "SoundCloud addresses the tension that artists once felt in navigating gatekeepers and other barriers to entry. Label ownership and radio were once the only outlets to get heard," says Casey Rae, a music and media professor at Georgetown University. Before long, "SoundCloud rapper" had become a term of its own. (Granted, it was often pejorative, much like "internet rapper" in the '00s and "backpack rapper" in the '90s, but its very existence speaks to a thriving ecosystem of bootstrapping artists.)
ADVERTISEMENT
And over time, the platform became home not just to DIY artists, but successful DIY artists. Chance The Rapper released his first two mixtapes,10 Days and Acid Rap, on SoundCloud. His Grammy award-winning album Coloring Book was SoundCloud's most streamed album in 2016. D.R.A.M.'s "Cha Cha" became a viral hit; Post Malone's "White Iverson" got the artist a record deal—and ultimately a platinum album. In 2016 Lil Uzi Vert leveraged SoundCoud to gain more new followers than any other artist; now the Atlanta upstart earns upwards of $45,000 per show.
Yet, the company's onetime $700 million valuation has declined precipitously. "SoundCloud is facing three primary pressures," Rae says. "It has to grow past a certain threshold even though growth will naturally plateau; manage high expectations from investors; and rely on a business model that requires them to pay at least 70% of available revenue to content license holders." That's a lot of boxes to check off—and while Apple and Spotify are bringing in users by the millions, SoundCloud Go, the company's premium paid subscription option, has yet to disclose its subscription numbers since it launched in 2016. Even if those numbers turn out to be astronomical, though, they might not save the company.
The silver lining for SoundCloud is that the entire music streaming industry is still finding its way. None of its pure-play competitors—Pandora, Spotify, or TIDAL—are profitable. Streaming exclusives, once seen as a market differentiator for companies willing to pony up, are falling out of vogue: Both Kendrick Lamar's *DAMN. *and Drake's More Life were multiplatform releases. In fact, More Lifesold and streamed better than Drake's 2016 Apple Music-exclusive Views, which could could influence how other artists will prospect exclusive opportunities. What SoundCloud needs is a way to turn that silver lining into sunshine.
Leveraging Loyalty
One possibility would be for more "alumni" promote the service. A few weeks ago, Chance The Rapper hosted Magnificent Coloring World 2, a private event for fans where he only invited the top .001% of his listeners on SoundCloud. When Chance advocates for SoundCloud above all platforms—despite selling and streaming his music everywhere—it generates goodwill for the company and could lead to additional revenue opportunities.
With more cash, SoundCloud could follow the lead of other streaming services and produce its own content. Apple Music's Beats 1, which also hosts celebrity DJs and releases artist exclusives, landed the first interview with Kendrick Lamar after DAMN. dropped. Spotify answered Beats 1 by supercharging its popular RapCaviar playlist: Last week, the playlist celebrated 4/20 by inviting Wale to discuss hip-hop culture while eating gourmet cannabis edibles. Neither is an exclusive album, but it's valuable original content that can draw users.
SoundCloud is like a startup incubator: it gives artists basic tools and exposure for early-stage growth. Unlike an incubator, it lacks equity stake or monthly rental fees to generate revenue directly from artists. It's a challenging position, but with the intriguing opportunities for SoundCloud and the ever-changing music streaming sector, it's too early to declare defeat. "If SoundCloud went away, there's a piece that would be lost in the culture," Rae says. "Where do [the artists] go if SoundCloud can't maintain operations?" Besides, "Bandcamp rapper" doesn't have the same ring to it.
SoundCloud sinks as leaks say layoffs buy little time
Posted Jul 12, 2017 by Josh Constine (@joshconstine)
Next Story
ADVERTISEMENT
A tense scene unfolded yesterday as user-generated, music-streaming service SoundCloud held an all-hands meeting to explain to employees why it suddenly had to lay off 40 percent of its staff last week.
Exiting team members wanted to know why they weren’t warned, while those who survived the cuts wanted assurance that the cost reductions would keep the company afloat for the long-run.
But as security ominously filed into SoundCloud’s meeting rooms at its offices around the world during the all-hands video conference broadcast from its Berlin headquarters, the startup’s staff discovered they wouldn’t be getting the answers they wanted. Instead, sources at SoundCloud tell TechCrunch that founders Alex Ljung and Eric Wahlforss confessed the layoffs only saved the company enough money to have runway “until Q4” — which begins in just 80 days. [Correction: 80 days, not 50 days]
That seems to conflict with the statement Ljung released alongside the layoffs, which noted that, “With more focus and a need to think about the long term, comes tough decisions.” The company never mentioned how short its cash would still last.
We reached out to Ljung and SoundCloud for this story and PR responded to the request reiterating Ljung blog post. After being presented with the leaked information from the all-hands, SoundCloud PR admitted that, “We are fully funded into Q4,” though it says it’s in talks with potential investors.
But further funding would require faith in SoundCloud that its own staff lacks. When asked about morale of the remaining team, one employee who asked to remain anonymous told TechCrunch “it’s pretty shitty. Pretty somber. I know people who didn’t get the axe are actually quitting. The people saved from this are jumping ship. The morale is really low.”
Another employee from a different office described the all-hands as “a shitshow” and said “I don’t believe that people will stay. The good people at SoundCloud will leave. Eric [Wahlforss] said something about the SoundCloud ‘family,’ and there were laughs. You just fired 173 people of the family, how the fuck are you going to talk about family?”
SoundCloud co-founder and CTO Eric Wahlforss
Hired just to be laid off
SoundCloud holds one of the most differentiated products in streaming music thanks to its repository of user-created songs uploaded by amateur and semi-professional musicians. That content, including unofficial remixes and hour-plus DJ sets, is missing from the top streaming competitors like Spotify and Apple. At the same time, this content comes with copyright problems and SoundCloud has had trouble monetizing it.
Despite the startup’s financial troubles, Ljung told those in attendance at the all-hands meeting he was adamant about SoundCloud staying independent and there’s no intention to sell the company. That hesitation may have cost a lot of people’s jobs.
Vojta Stavik uprooted his life to join SoundCloud at its Berlin office, but was laid off just 10 days before his start date
One of the facts that was most frustrating to SoundCloud staff was that the company continued hiring people into positions that would soon be eliminated, with some workers joining SoundCloud as little as two weeks before the layoffs. Several new hires had quit other jobs, sold their homes, abandoned rights to permanent residency and uprooted their lives in other countries to join SoundCloud’s Berlin office.
A new hire named Vojta Stavik was slated to start July 17th, only to have his job cancelled on July 7th just before he moved to Berlin. “So it means we are gonna act like my application to SoundCloud never happened?” Stavik asked CTO Artem Fishman. “Yes,” Stavik said the CTO replied. Stavik is now exploring legal action against SoundCloud because he says his signed job offer included four weeks notice of dismissal, yet “SoundCloud claims they are not going to pay me my salary during those 4 weeks.” [Correction: Fishman was the CTO at the time of this incident, not Wahlforss.]
During the all-hands, both sources say it was revealed that SoundCloud had known for months that it had to lay off a large number of people, yet didn’t properly inform the team that it should be cutting costs. “The investors said [the wave of layoffs] was part of the conditions” one source said were in reference to the $70 million debt funding SoundCloud received in March from Ares Capital, Kreos Capital and Davidson Technology after it failed to raise $100 million in venture funding.
SoundCloud’s lavish Berlin headquarters where employees were laid off without warnings about cost-cutting. Images via Factory Berlin (left), and Fraeulein Kimchi(right)
Some of SoundCloud’s offices had catered lunches twice a week and had lavishly stocked kitchens and bathrooms, according to a source. When team members joined, they were given company swag, headphones and brand new Apple laptops. Employees were confused how the company was “blowing through money, but now is saying they don’t have any money. People would have made sacrifices, to be honest. It’s a fun company to work at, but there was no indication.”
A core question from staff during the all-hands was why there wasn’t transparency into the finances or a strict hiring freeze. The message from management was that a hiring freeze would show weakness and lead to people asking questions. That wasn’t satisfying when the company ended up shedding almost half its staff.
Focusing on independent creators, not beating Spotify
It’s been almost three years since SoundCloud updated its user stats, though it still touts that 175 million people listen every month. Yet some analysts believe it to have sunk to as low as 70 million. The company hasn’t given employees any updates on the stats, either, with one telling TechCrunch “I think no one within SoundCloud believes the user number. I think they’ve been going down for a while now.”
Growth of SoundCloud’s subscription services also hasn’t been worth announcing, but the company plans to change its focus.
SoundCloud listener subscription pricing
SoundCloud has a free tier with ad-supported access to 120 million songs, largely from lower-quality independent artists. Its $4.99 per month SoundCloud Go subscription removes the ads and offers offline listening. And its $9.99 per month SoundCloud Go+ tier adds access to 30 million premium songs from big-name artists like what you’d find on Spotify or Apple Music.
In the all-hands, both sources say Ljung discussed SoundCloud getting back to its roots by prioritizing its open creator platform and the mid-tier Go subscription plan, rather than focusing on Go+ and the mainstream music of major record labels.
One source said Ljung explained that SoundCloud is not a giant streaming company and didn’t want to directly compete with the $9.99 plans like Spotify. Our other source said “the plan is to concentrate on the content where they don’t have to pay our part of the money to the labels.”
Like other streaming services, SoundCloud has to pay a huge percentage of revenue it earns off Go+ premium songs to the record labels. Spotify pays out around 70 percent, for example. Its margin is much better on the user-generated music uploaded to its service. Only a small percentage of creators is eligible for ad and subscription revenue share payouts from SoundCloud, and it pays them a much smaller cut than it does to labels for premium music.
Even at half the price of Go+, the higher-margin Go tier subscriptions could earn SoundCloud sizable revenue.
This plan has a chicken-and-egg problem, though. SoundCloud needs enough subscribers and ad listeners so payouts are high enough to lure the best artists who aren’t on major labels. But it needs the best artists’ content in order to seduce those listeners. Meanwhile, its free tier works fine for most occasional listeners, so beyond synced downloads and skipping a few ads, there’s not much reason to upgrade to $4.99 per month.
And the recent layoffs make everything tougher. Our sources say there were deep cuts to the revenue/monetization and creator relations teams. Beyond closing the San Francisco and London offices, there were significant layoffs in the New York office. The planned rollout of SoundCloud Go subscriptions in South America may be delayed, though some staffers are unsure it will happen at all.
Royalty distribution platforms like Dubset threaten to make some of SoundCloud’s most unique content like remixes and DJ mixes available on Spotify and Apple Music. Those services have continued to rapidly grow thanks to sleek and frequent redesigns while SoundCloud’s clunky interface falters. “Even at SoundCloud, people secretly listen to Spotify because it’s easier,” one employee said.
Can the internet’s record collection be saved?
After 10 years and raising well over $200 million, SoundCloud has failed to build a sustainable business off “the YouTube of music.” Trimming the fat hasn’t necessarily made it fit. If SoundCloud wants to survive, it may need to accept that it should sell to some more established company that could do better managing and monetizing it. YouTube grew into a content juggernaut, but it might never have made it that far without Google’s help. It would need to find as supportive a steward.
Otherwise, SoundCloud must get much more aggressive about identifying its differentiated value — independent musicians — and drop any business like Go+ where it can’t keep up. It would need to deepen its relationship with creators and offer more tools to get them paid, like the booming monthly subscription patronage platform Patreon. Unfortunately, SoundCloud PR tells me “There are currently no plans to make changes to our existing subscription offerings.”
[Update 7/13: SoundCloud has clumsily attempted to refute this article by issuing a statement to Variety saying our post contains “extensive inaccuracies”, yet its supposed ‘corrections’ simply repeat what we did publish, and refute something we didn’t publish.
SoundCloud writes “SoundCloud is fully funded into the fourth quarter”, which is the same quote we already included from its PR. SoundCloud writes “we continue to work with all employees who were let go to support them during this transition, with employment and financial assistance” but we never said it wouldn’t support these employees, merely that it uprooted people’s lives by hiring them and then laying them off weeks later. TechCrunch stands by its reporting.]
The fate of the world’s biggest collection of bedroom remixes, garage recordings, living room podcasts, basement DJ sets and all other manner of home-made sound is at stake. The death of SoundCloud would be a sad blow to the independent musicians who are scraping by as it is. And the sale to an exploitative corporation that sees music as at best a side hustle and at worst a loss leader could ruin this canvas for sonic creation.
That’s why it’s so worrisome that one employee of SoundCloud concluded “There’s no strategy.”
https://techcrunch.com/2017/07/12/soundshroud/
Posted Jul 12, 2017 by Josh Constine (@joshconstine)
Next Story
ADVERTISEMENT
A tense scene unfolded yesterday as user-generated, music-streaming service SoundCloud held an all-hands meeting to explain to employees why it suddenly had to lay off 40 percent of its staff last week.
Exiting team members wanted to know why they weren’t warned, while those who survived the cuts wanted assurance that the cost reductions would keep the company afloat for the long-run.
But as security ominously filed into SoundCloud’s meeting rooms at its offices around the world during the all-hands video conference broadcast from its Berlin headquarters, the startup’s staff discovered they wouldn’t be getting the answers they wanted. Instead, sources at SoundCloud tell TechCrunch that founders Alex Ljung and Eric Wahlforss confessed the layoffs only saved the company enough money to have runway “until Q4” — which begins in just 80 days. [Correction: 80 days, not 50 days]
That seems to conflict with the statement Ljung released alongside the layoffs, which noted that, “With more focus and a need to think about the long term, comes tough decisions.” The company never mentioned how short its cash would still last.
We reached out to Ljung and SoundCloud for this story and PR responded to the request reiterating Ljung blog post. After being presented with the leaked information from the all-hands, SoundCloud PR admitted that, “We are fully funded into Q4,” though it says it’s in talks with potential investors.
But further funding would require faith in SoundCloud that its own staff lacks. When asked about morale of the remaining team, one employee who asked to remain anonymous told TechCrunch “it’s pretty shitty. Pretty somber. I know people who didn’t get the axe are actually quitting. The people saved from this are jumping ship. The morale is really low.”
Another employee from a different office described the all-hands as “a shitshow” and said “I don’t believe that people will stay. The good people at SoundCloud will leave. Eric [Wahlforss] said something about the SoundCloud ‘family,’ and there were laughs. You just fired 173 people of the family, how the fuck are you going to talk about family?”
SoundCloud co-founder and CTO Eric Wahlforss
Hired just to be laid off
SoundCloud holds one of the most differentiated products in streaming music thanks to its repository of user-created songs uploaded by amateur and semi-professional musicians. That content, including unofficial remixes and hour-plus DJ sets, is missing from the top streaming competitors like Spotify and Apple. At the same time, this content comes with copyright problems and SoundCloud has had trouble monetizing it.
Despite the startup’s financial troubles, Ljung told those in attendance at the all-hands meeting he was adamant about SoundCloud staying independent and there’s no intention to sell the company. That hesitation may have cost a lot of people’s jobs.
Vojta Stavik uprooted his life to join SoundCloud at its Berlin office, but was laid off just 10 days before his start date
One of the facts that was most frustrating to SoundCloud staff was that the company continued hiring people into positions that would soon be eliminated, with some workers joining SoundCloud as little as two weeks before the layoffs. Several new hires had quit other jobs, sold their homes, abandoned rights to permanent residency and uprooted their lives in other countries to join SoundCloud’s Berlin office.
A new hire named Vojta Stavik was slated to start July 17th, only to have his job cancelled on July 7th just before he moved to Berlin. “So it means we are gonna act like my application to SoundCloud never happened?” Stavik asked CTO Artem Fishman. “Yes,” Stavik said the CTO replied. Stavik is now exploring legal action against SoundCloud because he says his signed job offer included four weeks notice of dismissal, yet “SoundCloud claims they are not going to pay me my salary during those 4 weeks.” [Correction: Fishman was the CTO at the time of this incident, not Wahlforss.]
During the all-hands, both sources say it was revealed that SoundCloud had known for months that it had to lay off a large number of people, yet didn’t properly inform the team that it should be cutting costs. “The investors said [the wave of layoffs] was part of the conditions” one source said were in reference to the $70 million debt funding SoundCloud received in March from Ares Capital, Kreos Capital and Davidson Technology after it failed to raise $100 million in venture funding.
SoundCloud’s lavish Berlin headquarters where employees were laid off without warnings about cost-cutting. Images via Factory Berlin (left), and Fraeulein Kimchi(right)
Some of SoundCloud’s offices had catered lunches twice a week and had lavishly stocked kitchens and bathrooms, according to a source. When team members joined, they were given company swag, headphones and brand new Apple laptops. Employees were confused how the company was “blowing through money, but now is saying they don’t have any money. People would have made sacrifices, to be honest. It’s a fun company to work at, but there was no indication.”
A core question from staff during the all-hands was why there wasn’t transparency into the finances or a strict hiring freeze. The message from management was that a hiring freeze would show weakness and lead to people asking questions. That wasn’t satisfying when the company ended up shedding almost half its staff.
Focusing on independent creators, not beating Spotify
It’s been almost three years since SoundCloud updated its user stats, though it still touts that 175 million people listen every month. Yet some analysts believe it to have sunk to as low as 70 million. The company hasn’t given employees any updates on the stats, either, with one telling TechCrunch “I think no one within SoundCloud believes the user number. I think they’ve been going down for a while now.”
Growth of SoundCloud’s subscription services also hasn’t been worth announcing, but the company plans to change its focus.
SoundCloud listener subscription pricing
SoundCloud has a free tier with ad-supported access to 120 million songs, largely from lower-quality independent artists. Its $4.99 per month SoundCloud Go subscription removes the ads and offers offline listening. And its $9.99 per month SoundCloud Go+ tier adds access to 30 million premium songs from big-name artists like what you’d find on Spotify or Apple Music.
In the all-hands, both sources say Ljung discussed SoundCloud getting back to its roots by prioritizing its open creator platform and the mid-tier Go subscription plan, rather than focusing on Go+ and the mainstream music of major record labels.
One source said Ljung explained that SoundCloud is not a giant streaming company and didn’t want to directly compete with the $9.99 plans like Spotify. Our other source said “the plan is to concentrate on the content where they don’t have to pay our part of the money to the labels.”
Like other streaming services, SoundCloud has to pay a huge percentage of revenue it earns off Go+ premium songs to the record labels. Spotify pays out around 70 percent, for example. Its margin is much better on the user-generated music uploaded to its service. Only a small percentage of creators is eligible for ad and subscription revenue share payouts from SoundCloud, and it pays them a much smaller cut than it does to labels for premium music.
Even at half the price of Go+, the higher-margin Go tier subscriptions could earn SoundCloud sizable revenue.
This plan has a chicken-and-egg problem, though. SoundCloud needs enough subscribers and ad listeners so payouts are high enough to lure the best artists who aren’t on major labels. But it needs the best artists’ content in order to seduce those listeners. Meanwhile, its free tier works fine for most occasional listeners, so beyond synced downloads and skipping a few ads, there’s not much reason to upgrade to $4.99 per month.
And the recent layoffs make everything tougher. Our sources say there were deep cuts to the revenue/monetization and creator relations teams. Beyond closing the San Francisco and London offices, there were significant layoffs in the New York office. The planned rollout of SoundCloud Go subscriptions in South America may be delayed, though some staffers are unsure it will happen at all.
Royalty distribution platforms like Dubset threaten to make some of SoundCloud’s most unique content like remixes and DJ mixes available on Spotify and Apple Music. Those services have continued to rapidly grow thanks to sleek and frequent redesigns while SoundCloud’s clunky interface falters. “Even at SoundCloud, people secretly listen to Spotify because it’s easier,” one employee said.
Can the internet’s record collection be saved?
After 10 years and raising well over $200 million, SoundCloud has failed to build a sustainable business off “the YouTube of music.” Trimming the fat hasn’t necessarily made it fit. If SoundCloud wants to survive, it may need to accept that it should sell to some more established company that could do better managing and monetizing it. YouTube grew into a content juggernaut, but it might never have made it that far without Google’s help. It would need to find as supportive a steward.
Otherwise, SoundCloud must get much more aggressive about identifying its differentiated value — independent musicians — and drop any business like Go+ where it can’t keep up. It would need to deepen its relationship with creators and offer more tools to get them paid, like the booming monthly subscription patronage platform Patreon. Unfortunately, SoundCloud PR tells me “There are currently no plans to make changes to our existing subscription offerings.”
[Update 7/13: SoundCloud has clumsily attempted to refute this article by issuing a statement to Variety saying our post contains “extensive inaccuracies”, yet its supposed ‘corrections’ simply repeat what we did publish, and refute something we didn’t publish.
SoundCloud writes “SoundCloud is fully funded into the fourth quarter”, which is the same quote we already included from its PR. SoundCloud writes “we continue to work with all employees who were let go to support them during this transition, with employment and financial assistance” but we never said it wouldn’t support these employees, merely that it uprooted people’s lives by hiring them and then laying them off weeks later. TechCrunch stands by its reporting.]
The fate of the world’s biggest collection of bedroom remixes, garage recordings, living room podcasts, basement DJ sets and all other manner of home-made sound is at stake. The death of SoundCloud would be a sad blow to the independent musicians who are scraping by as it is. And the sale to an exploitative corporation that sees music as at best a side hustle and at worst a loss leader could ruin this canvas for sonic creation.
That’s why it’s so worrisome that one employee of SoundCloud concluded “There’s no strategy.”
https://techcrunch.com/2017/07/12/soundshroud/
Enjoy Soundcloud for the podcasts & music. Have linked friends and family to some of the pages in recent years when they've asked for specific episodes or mixes, or a user-friendly format of back episodes.
.....
Similar threads
