“We will be making reductions to our global team that will impact up to 20% of our company,” Weissman wrote in a memo obtained by Billboard. “Making changes that affect people is incredibly hard. But it is one that is necessary given the challenging economic climate and financial market headwinds.”
“Today’s change positions SoundCloud for the long run and puts us on a path to sustained profitability,” Weissman added. “We have already begun to make prudent financial decisions across the company and that now extends to a reduction to our team.”
SoundCloud Debuts New Payout Model
Fan-powered royalties are a more equitable and transparent way for independent artists who monetize directly with SoundCloud to get paid. The more fans listen on SoundCloud, and listen to your music, the more you get paid.
Under the old model, money from your dedicated fans goes into a giant pool that’s paid out to artists based on their share of total streams. That model mostly benefits mega stars.
Under fan-powered royalties, you get paid based on your fans’ actual listening habits. The more of their time your dedicated fans listen to your music, the more you get paid. This model benefits independent artists.
SoundCloud to Let Fans Pay Artists Directly
SoundCloud is preparing to introduce a new payment system that would allow fans to pay artists directly, multiple sources close to the situation tell Billboard, setting what could be a game-changing precedent for the streaming world.
The move would make SoundCloud the first major music streaming service to embrace a direct payment model, a strategy that has been popular with Chinese streaming services like Tencent Music’s QQ Music for years, and one that subscription services like Patreon and OnlyFans have built their businesses around, as musicians and fans around the world clamor for bigger digital music distributors to do the same. A source close to the company says SoundCloud is still exploring several alternative streaming payout models and will announce its plans before the end of the first quarter of 2021.
SoundCloud Reveals 2017 Data
SoundCloud have released their 2017 year-end data:
We’ve amped up this year’s list for a total of 17 categories that touch every corner of the SoundCloud ecosystem, from hip-hop, pop, dance and rock, to what’s new, now and next in music culture. This year’s list celebrates the diverse creativity on the platform and within our community–everything from the buzziest tags in 2017 like ChillHop and Vaporwave, to the year’s most creative cities (welcome to the list Houston, Atlanta, Philadelphia and Seoul!).
SoundCloud Accepts $170 Million Rescue, Taps New CEO
SoundCloud has taken $170 million in new funding and now have a new CEO, Billboard reports:
The struggling digital music service today secured a fresh round of funding that assures SoundCloud will remain independent, even as a new executive team takes over to steer the service into the future.
The Raine Group, a boutique merchant bank, joined with the Singapore-based investment company Temasek, in leading a $169.5 million investment round that infuses SoundCloud with much-needed cash.
Former Vimeo CEO Kerry Trainor succeeds founder Alex Ljung as chief executive, and Michael Weissman, another former executive at the video platform, was named SoundCloud’s chief operating office
The Inside Story of SoundCloud’s Collapse
Ryan Mac, writing for BuzzFeed:
In a music era dominated by Spotify, SoundCloud has been, at the best of times, a startup in stagnation, and, at the worst of times, an organization in disarray. Once harboring aspirations to be the YouTube of sound, the Berlin-based company has struggled to remain viable, hamstrung by management missteps, an ineffective business strategy, and a stubborn music industry that would rather it had never existed.
And:
With SoundCloud holding out for just under $2 billion, Twitter balked, sources said, put off by the heady price tag, music industry headaches, and the discrepancy between Soundcloud’s monthly visitors and its registered users. (Many people listened to SoundCloud’s content, but never registered with the site.)
And:
SoundCloud’s quest to build a business and find legitimacy in the eyes of labels divided the company and alienated long-time users. Internally, workers noticed a distinct shift away from creators and toward listeners. Internal key metrics changed from “tracks posted” to “number of minutes listened.” Meanwhile, the company’s short staffed engineering team focused on developing products that could better track copyrighted content. When SoundCloud killed its record button, the move was interpreted by some as a sign the company was less focused on creators. Soon it would stop supporting groups, a feature that allowed like-minded users to congregate on the site and share or comment on the tracks posted to it.
SoundCloud is in Trouble
SoundCloud Ltd. is cutting about 40 percent of its staff in a cost-cutting move the digital music service says will give it a better financial footing to compete against larger rivals Spotify Ltd. and Apple Inc.
SoundCloud, which in January said it was at risk of running out of money, informed staff on Thursday that 173 jobs would be eliminated. It had 420 employees. The company’s operations will be consolidated at its headquarters in Berlin and another office in New York. Offices in San Francisco and London will be shut.
Guess I should start giving serious thought to where I’d host the podcast if they go under.
SoundCloud Needs More Money, or It May Sell at a Fire-Sale Price
Peter Kafka, writing at Recode:
Sources say the streaming music service has been trying to raise more than $100 million since last summer, without success. It has also talked to potential acquirers, including Spotify, without closing a deal.
The upshot, according to people familiar with the company: SoundCloud is now at a point where it may sell for less than the $700 million investors thought it was worth a few years ago. One source thinks it will consider bids, as long as they’re above the total investment it has raised to date — about $250 million.
SoundCloud Still Losing Money
Tim Ingham, writing at Music Business Worldwide:
According to a new filing at Companies House (UK), SoundCloud Ltd’s revenues grew 21.6% to €21.1m ($22m) in 2015 – but its net losses accelerated 30.9% to €51.22m ($52m).
Reports That Spotify Has Backed Out of Talks to Acquire SoundCloud
Jon Russell, writing at TechCrunch:
The digital music marriage that many wanted to happen isn’t happening after all. Spotify has given up on its latest effort to buy SoundCloud following months of talks between the two, according to a source at Spotify who is familiar with discussions.
Spotify Reportedly in Talks to Buy SoundCloud
The Financial Times is reporting that Spotify is in “advanced” talks to purchase SoundCloud.
Twitter Invests in SoundCloud
Twitter Ventures has invested around $70 million into SoundCloud. From Recode:
Twitter has invested around $70 million in the music service, as part of a round that should end up in the $100 million-range, according to sources familiar with the deal. The round is expected to value SoundCloud at about $700 million — the same value that investors placed on the company in 2014, when it raised $60 million; since then it has also raised a debt round.
SoundCloud to Offer Free “Digital Mastering”
SoundCloud has teamed up with LANDR to offer a free “mastering” service to their members. From the SoundCloud blog announcing this partnership:
Driven by the smartest algorithms in the game, LANDR’s all-in-one, drag and drop interface makes mastering your tracks easier than ever. For this partnership, LANDR has created a new format specifically optimized for SoundCloud streaming.
Really I’m just excited I can now make jokes about how algorithms can do a better mastering job on albums than some bands end up with.
SoundCloud Having RSS Issues
SoundCloud was having some issues with their RSS feeds updating over the weekend. That means last week’s podcast may not have been sent out to everyone, so, make sure you do a refresh if you don’t see it.
We’ll be recording a new episode this week, hit us up with any questions or topics you may want us to cover using #askEncore on Twitter or in any of the Encore threads in our forum.
Dave Wiskus on SoundCloud Go and Artists
Dave Wiskus, of Airplane Mode, wrote an open letter to SoundCloud about their new streaming service:
You can slice it, package it, or spin it however you like, but the bare fact is that you’re making money off of songs you aren’t paying for. Worse, you’re doing it while perpetuating an air of exclusivity around the concept of making money. All while you’re pretending to be a friend to the little guy. There’s nothing artist-friendly about this approach.
But wait! There’s more!
Airplane Mode has a SoundCloud Pro account to get access to unlimited uploads and a few other features that make the service useful. This account costs us $15 per month. So not only are you getting our music for free and paying us nothing, we’re actually paying you to take it. What an excellent deal. For you.