29 03 16

SoundCloud Go paid subscription service launches in the US (interview)

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SoundCloud has launched its long-awaited premium subscription tier, SoundCloud Go, although it will be US-only for now.

The launch comes shortly after SoundCloud reached a licensing deal with Sony Music, the third and final major label to sign on the dotted line, also joining indie agency Merlin and various publishers.

Details? The official price for SoundCloud Go will be $9.99 a month – with a 30-day free trial – with features including offline listening; a catalogue of 125m tracks swelled by the catalogues of those partner labels; and no advertising.

Why “official” price? Because SoundCloud Go is launching through the company’s iOS and Android apps: it’ll cost $9.99 on Android but $12.99 on iOS, due to Apple’s 30% cut of in-app subscriptions.

Meanwhile, musicians and other creators who already pay for SoundCloud’s ‘Pro Unlimited’ features will get a discounted rate of $4.99 a month on SoundCloud Go for the first six months.

Those are the basic details, but Music Ally had plenty more questions about how SoundCloud Go will interact with SoundCloud’s existing free tier; how the company plans to help listeners navigate through its huge catalogue; how remixes and mixes will be monetised; and whether SoundCloud has managed to avoid any Spotify-style mechanical licences headaches.

SoundCloud Go

‘THOSE DEALS ARE VERY SPECIAL: THEY’RE BESPOKE’

We talked to SoundCloud’s co-founder Eric Wahlforss to get some of those answers.

“We now have all the music industry essentially agreed on deals that we’ve been working on for quite some time. We have Sony, Universal, Warner, Merlin and numerous smaller labels. And we also have all of the publishers that matter in the US agreed,” said Wahlforss.

These deals are very special: they’re bespoke in nature, and allow us to do some pretty cool things.”

Wahlforss is certainly bullish about SoundCloud Go’s prospects, telling Music Ally that it “might be the most ultimate music-streaming service that has ever existed… the most comprehensive, deepest and broadest music experience you can have”.

Why? His first reason is the sheer size of its catalogue, with quadruple the tracks of most of its rivals. That’s thanks to the 100m+ tracks from SoundCloud’s free tier, plus 25m more from ingesting the catalogues of major and indie labels.

“It’s a lot of emerging and indie artists, major artists and also DJs, remixers and mash-ups – and another bunch of millions of tracks coming straight from the major labels, all combined in one subscription,” said Wahlforss.

“It really is a magical type of experience. You’ll get an emerging artist that just started making music a year or two ago and now has traction on SoundCloud, next to Adele, next to John Lennon, next to an hour-long DJ set, next to a mash-up – all of that in one place.”

SoundCloud Go’s offline-listening and no-ads features aren’t competitive advantages: they’re standard for any subscription streaming service, even if they’ll be welcome additions: an offline mode has been “the top requested feature” from SoundCloud’s existing (free) users for some time now.

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‘WE’RE GOING TO LAUNCH IN MULTIPLE COUNTRIES THIS YEAR’

The company’s label deals are global, note, apart from territories like China and Japan. What’s holding SoundCloud back from launching SoundCloud Go globally?

“On the publishing side, it’s a little bit more difficult. In Europe you need collecting society deals, typically country by country,” said Wahlforss. “Plus you want to license additional local repertoire. But we feel very good about going pretty rapidly with international expansion: we’re definitely going to launch in multiple countries this year.”

One question that brings a more terse answer from Wahlforss concerns publishing royalties – and specifically, the mechanicals licensing that has sparked multiple class-action lawsuits in the US in recent months – two aimed at Spotify, and other streaming services.

The main problem there is that there are whole swathes of their catalogues for which the streaming services don’t have accurate publishing data in order to secure the necessary licences – let alone pay royalties out.

British startup Electric Jukebox recently called off its US launch citing uncertainty around the mechanicals situation, but SoundCloud Go is going ahead. Does that mean SoundCloud has solved the problem?

“I can’t really comment on that at this moment,” says Wahlforss, in the sole clamming-up moment of the interview. We sense plenty of other people will be asking the same question in the weeks ahead, though.

remix

‘WE’LL SEE LESS TAKEDOWNS ON SOUNDCLOUD’

The bespoke nature of SoundCloud’s deals include their provision for mash-ups and DJ mixes, with plans to pay royalties out to the rightsholders of tracks featured in this kind of content.

It’s a first for a mainstream, user-generated platform of this type, in terms of identifying different songs within tracks, then assigning royalties accordingly – although Dubset is separately working on this kind of technology, and recently signed a distribution deal with Apple Music.

Wahlforss says that licensing mixes and mash-ups is one of the less talked-about aspects of SoundCloud’s licensing deals, but perhaps one of the most important.

“This is huge for that [DJ/producer] community globally: this is the first time that actually the industry has blessed an approach to this that isn’t fundamentally destroying or limiting that activity in a way that would mean it would fragment,” he said.

“We have found an approach that all of the major rightsholders are really happy with and excited about, and that will be great for DJs and people who want to remix content. First, we’ll see less takedowns on SoundCloud over time, and second, there will be a way to monetise this over time, and have the revenue flow back to the rightsholders, and even to the people who curate DJ mash-up content.”

Revenues for the DJs and producers, not just the rightsholders of the tracks that they sample? Following up after the interview, a spokesperson told Music Ally that this remains something SoundCloud is “working towards solving” – but that for now, the revenues will go to rightsholders only.

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‘THERE ARE LITERALLY MILLIONS OF GYM PLAYLISTS’

As the existing crop of streaming services know well, even 30m tracks can be a daunting catalogue to navigate for a casual music listener. 125m is a haystack four times bigger in which to seek musical needles.

There are no big changes in navigation for SoundCloud Go: it will be the same as the existing free service when it comes to discovering tracks. Wahlforss pointed out that SoundCloud has already been tackling the challenge of “lean-back” listening though.

“We just [in February] launched Stations, a lean-back discovery experience that draws on all of the social signals and all of the activity that happens on SoundCloud, and also the unique breadth of the content,” he said.

“It leads to a very powerful radio-type experience that allows you to discover things much more seamlessly. It’s one of the things that we’re going to invest a lot more in over the year: these smoother and easier-to-use listener experiences. And it’s a different kind of radio content to the other services, just due to the depth of our catalogue.”

Rivals like Spotify and Apple Music are putting huge effort into their programmed playlists as a more accessible, lean-back way in to their catalogues.

Is SoundCloud ramping up its editorial team to do something similar, now it has a premium tier? From Wahlforss’ comments, it sounds like the company is taking a different angle: making it easier for its users to find one another’s playlists

“We’ve been playing with discovery and content for a while. On our Android app we have a bunch of tests with playlist discovery,” he said. “For example, there are literally millions of gym playlists in our community, and some that are extremely good.”

“From this social platform, from the community-driven approach, we can take another approach to the programming and curation and playlisting aspects. We have some very unique signals here that I think we can draw on. Some of those gym playlists I mentioned are very unique: it’s different from what you would find elsewhere.”

SoundCloud founders

SoundCloud founders Alexander Ljung and Eric Wahlforss.

‘THE FREE EXPERIENCE GETS BETTER AFTER THIS LAUNCH’

In the months leading up to SoundCloud Go’s launch, the company’s CEO Alexander Ljung has regularly defended the free tier of SoundCloud, stressing that the company does not want to choose between free and paid – but rather have both work together. Wahlforss agreed.

“This is an additive experience. A complementary experience. The free service will stay the same as before. In fact, there will be more content in the free service as a result of signing all these deals and getting the labels engaged here,” said Wahlforss. “The free experience gets better after this launch. There will be more content to enjoy.”

Which brings us to another key point about SoundCloud Go: the way labels and artists will be able to decide whether their songs are available on the free tier, the premium tier or both.

“It allows a level of flexibility and a level of control for artist and label that hasn’t really been there before,” said Wahlforss – although some services, like the late Rdio, have in the past allowed labels to make certain music premium-only.

You can now decide the level of monetisation, or promotion for your content,” continued Wahlforss. “Rightsholders can strike a balance between the promotional aspects of SoundCloud, and monetising the music.”

He defended SoundCloud’s free model though. “We think that our ads business is actually doing great: we’ve had the ads platform up and running in the US for over a year and a half, and it’s doing tremendously well. The ad revenue is scaling up rapidly quarter-on-quarter,” he said.

“The key really is the ads plus the subscriptions: you can’t have only one or the other in that. We’ve debated that a lot, looking at these other platforms where artists are forced either to make all of their content available for free, or put it completely behind a paywall.”

Wahlforss expects different strategies to be tested by different labels. “Some rightsholders are totally bullish on free and want everything to be free. Some labels are much more conservative,” he said.

Having everything in paid and nothing in free makes no sense, however. This debate is not yet settled: it’s not entirely clear how this will play out over time, but it is clear both worlds are needed.”

‘THIS INTERPLAY BETWEEN EMERGING AND ESTABLISHED ARTISTS’

There are two big questions about SoundCloud that will be answered as SoundCloud Go rolls out. First: how can it differentiate itself from other $9.99-a-month streaming services? And second, how can it persuade people to pay for a service that has been free, historically?

On the first of those, Wahlforss talks about the platform as a whole, rather than the Go tier specifically.

“When you use SoundCloud, it’s a different feel. It feels more like social media: it’s more authentic, it’s more raw, it’s more direct. You get a sense of the presence of the creator on the platform,” he said.

“It aligns very well with other sorts of social media, from Snapchat to Instagram and Twitter. Things are real-time and they sort of have this flow, which none of the other streaming services can do. There’s a real-time feedback loop.”

The idea of flicking from famous artists like Adele or Taylor Swift – yes, SoundCloud will have some of her albums – to brand new emerging artists is clearly on SoundCloud’s agenda.

“You’ll start an experience listening to Adele, then next to her in the search results we’ll have these remixes of Adele that are hugely popular too. Then the major artists will be the starting point into discovering lesser-known artists,” said Wahlforss.

“One of SoundCloud’s powers historically has been this interplay between emerging and established artists. Kanye West posted a bunch of tracks a couple of weeks ago. As a result another rapper called Rory Fresco, an emerging artist from Chicago, got played right after Kanye’s tracks, and got popular overnight.”

‘ONE OF THE MOST ENGAGED PLATFORMS IN THE WORLD’

What about the second big question about SoundCloud Go though: will people really want to pay for it, when they could carry on using SoundCloud for free?

With 175 million monthly listeners, even a small conversion rate could make SoundCloud Go a significant player in the subscriptions world – a 7% conversion rate would overtake Apple Music for example.

(Huge caveat: the 175m figure includes people who come across SoundCloud embeds elsewhere on the web: while that openness has been part of the platform’s appeal for promotional purposes, describing all those listeners as ‘SoundCloud users’ is a bit of a stretch.)

Wahlforss provides some context to the figure, and sets out why he believes that paying for SoundCloud will appeal.

“We have over 175 million listeners every single month, but tens of millions of those listeners are logged in: they’re super-highly engaged, they’re using our mobile apps,” he said. “We’ve done lots of surveys and had some hugely encouraging feedback: there’s a very high correlation between engagement and the propensity to pay.”

He pointed to recent research from comScore claiming that SoundCloud is the 11th most-used app – and a top-eight app for younger “millennials”.

“It really is one of the most engaging platforms in the world. With that level of engagement, if you can give some of the most important value adds to those listeners, and see into that massive user base, I have no doubt that will convert a lot of people to paid users,” he said. “I’m bullish on that, although obviously I’m very biased!”

Getting to this point, in terms of licences, was a slog for SoundCloud – but the company faces even bigger challenges ahead, as it tries to carve out an audience against competition from well-resourced rivals including Apple, Google/YouTube, Amazon, Spotify and Deezer.

That is likely to require another injection of capital (whether through funding or an acquisition), for a company whose last financial results revealed a €39.1m net loss in 2014, before its licensing agreements kicked in – not to mention the expense of developing and marketing SoundCloud Go.

Still, for Americans at least, today’s the day when they can start to gauge SoundCloud’s chances of becoming a significant player in that streaming subscriptions battle.

Guest;Free;Member;Trial;Subscriber

Stuart Dredge
READ MORE: Analysis News
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