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What You May Not Know About SoundCloud - Part 1 [Episode # 05]

Imagine for a second you’re an innovator of transportation. It is your job, no, it is your calling to transport one parcel or package from one place and ensure that it arrives safely to its final destination unharmed and unscathed. You tirelessly work around the clock night in night out drawing up plans and sketches on how to make your parcel delivery run as fast, efficient and safe as possible. Then after years and years of perfecting your life’s work, you realize you have built one of the largest delivery systems in the world. However, you are no longer a delivery service but you are one of the largest platforms for content providers to share, grow and network. Nope, I’m not speaking of UPS, FedEx or even United Postal Service, I am speaking of SoundCloud.

Now, do I have your attention?

Okay, I know that may have been a bit too poetic for the introduction, but it was to prove a very real point: SoundCloud was originally established as a file sharing site. Back in 2007 founders Alex Llung and Eric Wahlforss founded the file sharing site when they discovered, that, as upcoming engineers, there was no real platform to share their mixes and edits between each other. So they created the concept of a platform that was solely just about sending and listening to edits and changes between editors.

The platform quickly grew in popularity, and the site then became a MAJOR hub for DJs to upload their latest mixtapes and creations from one online community to another globally and receive real time feedback and notes in the process.

As these chain of events occurred and quickly multiplied the amount of users exponentially, it wasn’t just the DJ community that was using the platform anymore. Once word got out about this incredible music sharing and playing hotspot the numbers took off. To date the company boasts a whopping 18 million creators currently on the platform. But the fun doesn’t stop there, SoundCloud reports that they currently have 110 million tracks and over 175 million active listeners. Reportedly one of the highest active listening bases in all streaming platforms.

So what’s wrong with rapid sometimes non scalable growth? I mean it seems like having more people and more tracks would be a good thing, right?

SoundCloud founders Alex Llung and Eric Wahlforss

Well, sort of. Since SoundCloud originally made their mark on the music streaming map as a social network, they never realized that with this type of growth and scale, that they would be in the same conversations as Apple Music and Spotify.

Even more importantly, SoundCloud’s original spike in traffic came from DJ creators, and as we all know DJs sample copy-written music from PROs to make their own creations.

So, therein lies their problem. SoundCloud is now viewed as a music streaming company with 110 million tracks and the majority of it is copy-written work that PROs have not signed off on.

To quote the cult classic The Christmas story…”Ohhhhhh Fudgggeeee!”

However it wasn’t long before the BIG 3 (Sony, Universal, and Warner) stepped in just as SoundCloud was getting ready to monetize their problem…I mean platform, Freudian slip perhaps. As I was saying, the big 3 stepped to take 3-5% equity stake in the platform, and in return gave the original DJ social network a hefty 15 million licensed songs. And as the world turns, SoundCloud rolled out their brand new subscription model SoundCloud Go.

Here is the breakdown for SoundCloud Go:

The premium subscription service is $9.99 a month and also offers online streaming, and most importantly a library of 125 million tracks.

Now, I wouldn’t be a thorough music news source if I didn’t briefly mention that back in 2013 - 2014

Alison Moore, SoundCloud's Chief Revenue Officer.

SoundCloud has reported a 70 million dollar loss. BUT, the future does look bright. In March 2016 the company brought the literal brain child of HBO’s digital platform, when they hired the Margaret Thatcher of growth an innovation, Alison Moore as their Chief Revenue Officer.

We were so astonished by her background that I have included her actual Linkedin profile link so you can see for yourself why SoundCloud put their trust in Alison.

So from social network to streaming platform, SoundCloud has been through some serious peaks and valleys. But most importantly, will these changes be enough to keep them on the tips of the tongues of future creators and listeners? We can only do what we do best here at M|!D, make educated guesses and report the winds of change in the music industry and streaming climate. But we hope they can deliver what they intended.





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