Published January 18th 2016
German music platform SoundCloud was originally intended for musicians to share their music among each other, but over the years it has grown out to be a full blown music publishing tool on which artists can build a following and distribute music to music fans worldwide.
You Use SoundCloud? So Do 250 Million Others!
With 250 million users a month, it’s no surprise the platform is used by major artists, such as Kanye West, as well as most major labels, to premiere new music to the public.
The Search To Make SoundCloud Work Commercially
Though it offers a great way to introduce new music, so far, the platform has not offered musicians to directly make money on SoundCloud. In fact, the platform actually costs money when you exceed the amount of free minutes you can upload, at which time you need a premium account to upload more.
About 150 million artists have subscribed to one of the two of these premium packages, but still, the last publicized figures showed a $29 million loss for the company in 2013.
For most artists and labels, it’s been the strategy to simply introduce music or snippets of new music on SoundCloud and quickly direct people to Spotify or iTunes, in order to make some money on your plays or downloads.
While artists are looking for a way to include and commercialize the SoundCloud community, so is SoundCloud. They started selling advertisement space since 2014, which you can avoid with their latest subscription type for whoever wants to stream ad-free, launched in November 2015.
The Big Three Are Onboard
With a shared advertisement revenue on offer, SoundCloud has managed to strike deals with almost all the major labels. Universal was last to join, Warner Music had already joined and Sony Music is the only one, who’s still holding out.
Tweaks To Meet User Demands – Permission To Remix and Cover
The licensing deals with the major labels also allow SoundCloud to meet some major user demands.
First, SoundCloud users can now upload their personal remixes of these catalogs, without having the tracks or their accounts removed, which was an issue even I was running into. At the same time, the original artist will receive royalties over your remix or cover.
Second, SoundCloud introduced their first official charts in various genres, just last week. The charts have replaced the Explore function, that SoundCloud has had for ages. This is a great way to see what exactly is trending on the platform, but, of course, only major artists with over 800K plays make it in there…
However, last week SoundCloud also secured a new debt with Tennenbaum Capital Partners of $35 million with the option of another $70 million through bonds. The money comes a year after its last funding round of $60 million at the beginning of 2014. At that time Soundcloud’s value was estimated at $700 million, which later that year reportedly soared to $1.2 billion, when funds were, also reportedly, dangerously low for the company.
What Will SoundCloud Be Using These Funds For?
SoundCloud wants to grow its users base, both creators and listeners, making revenue on both types of users with their subscription packages. Believe it or not, SoundCloud is still working on building up a name in the US market, which they’ve been focused on for a couple of years.
Growth is of vital importance to compete with streaming giants such as Spotify. Even though SoundCloud has got more interactive functions compared to Spotify, it’s also known that SoundCloud has got a different type of user; usually more tech savvy and music lovers of dance music, underground talent and remixes. Therefore MixCloud is actually considered a more direct competitor of the service, but still SoundCloud wants to compete with Spotify and other major streaming services for your paid listening pleasure.
Keep in mind, that it’s currently esti that itertisement space,rk For You As A Creativein their own timelines.ce, but still SoundCloud wants to compete with Spmated, only 6% of streaming users have chosen for a paid subscription. Woohoo! Booming business….
The Big Cash In?
So, it’s no wonder that rumors have also been going around for a few years, that the owners are looking to cash in, either by going public with the company or to sell it. Potential buyers would like to see a solid line of credit.
Last year, there were rumors that Twitter had showed interest in SoundCloud, but they backed out later. It won’t be long ‘til some other party will find some commercial use for them though.