We thought things were on the up and up. After the Great Copyrighted Account Purges of 2015, SoundCloud struck a deal last month with Universal Music Group, gaining access to their catalogues. That made Sony the only holdout. It was just a matter, it seemed, of getting the right numbers on the table and those user deterring takedowns and suspensions would appear as a hiccup in the early days of a healthy tech giant. But this week, we've learned the company has far greater troubles.
According to a recently published financial report, the Berlin-based audio streamer brought in $17.35 million in 2014. It lost, on the other hand, $44.19 million. In fact, over the last two years, the company has burned through $70 million. The company was able to raise $77 million in investment in 2015, but like plugging a leak with bubblegum, that just won't keep the dam from bursting. Is this when you use the words "hemorrhaging money"?
Auditor KPMG said in the report that the need for ongoing investment represents “a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.” That is, for all us non-actuarial types, the minute people stop throwing money on this fire, it's going to die. Bankrupt. SoundCloud gone the way of Rdio and Grooveshark and the dodo. And leaving big holes in a lot of old Chart Attack articles.
But there is hope. In 2014, SoundCloud introduced ads, opening a new revenue stream. Imminently (and, reportedly, part of the deals with the majors), SoundCloud will transition to a subscription-based model with a free tier as well as an ad-less paid tier. Is this the way forward? Chopping up that 3-hour future garage set with interjections about podcasting and audiobook services and print-at-home stamps or else paying a monthly fee to listen to your music uninterrupted? Or will listeners simply crossover to rivals like Bandcamp and Mixcloud?
The company told FACT mag that the figures, frightening as they might appear, “reflect those of a company in a strong growth stage,” which still has “over 18 million creators are using the platform, sharing well over 110 million tracks, and reaching 175 million monthly active listeners.” The question is: can they grow that user base quickly enough to warrant a few more shovelfuls of money on the fire?
SoundCloud is in major trouble by chris hampton | Chart Attack.
