November 13, 2016:SoundCloud on acquisition talk: ‘There is a lot of interest in us’

SoundCloud co-founder and CTO Eric Wahlforss was hardly likely to confirm rumours about Spotify buying his company while on-stage at the Web Summit conference. But he didn’t outright deny it.

“What I would say is that we are one of the fastest-growing platforms in the space and there is a lot of interest in us,” said Wahlforss when interviewed by Music Ally at the Lisbon tech conference. “We raised money from Twitter earlier this year. There are always some conversations in this space.”

One prominent venture capitalist that Music Ally spoke to off-the-record during the conference suggested that a Spotify/SoundCloud deal made “perfect sense” to them.

“SoundCloud has the ear of the artist community,” argued the VC. “And Spotify is desperate to have a closer relationship with artists and to stop being so reliant on licensing deals with labels.” They suggested that the acqusition was less a matter of if and more a matter of when.

We put that notion to Wahlforss during his session, and he alluded to the fact that SoundCloud is not just attracting artists that Spotify would like a closer relationship with, but that it is also attracting an entire audience segment that it craves.

Our audience is really young. We found there is this whole new generation [on SoundCloud]; there is now Generation Z, the next generation after Millennials. The way we think of it is that Millennials had an iPod as their first device and Gen Z has an iPhone or Android phone as their first device. That is a world of difference and the behaviours we see are just so radically different. They can relate to a service like SoundCloud because of that directness.”

eric-wahlforss

If SoundCloud isn’t to be bought, perhaps it may yet go public. Wahlforss played a straight bat to a question about a potential IPO for his company.

“We are very determined that we are building a sustainable platform,” he said. “We are focused on the long game here and it has been a long time coming.”

Wahlforss also talked up the windowing element to SoundCloud Go, the company’s premium subscription tier that is now live in seven markets, following its most recent launch in Canada.

One of the things we are trying to do with these deals is about artist control. We allow you as a creator to say if you want to share your music through the ad-supported tier, or keep it behind the premium subscription and optimise the revenue side,” he said.

“We are opening up that flexibility so artists can use it in various ways. That goes back to what we are all about. We are all about that power of putting the tools into the hands of the creators and rightsholders.”

A recurring theme in the music-focused sessions at this year’s Web Summit was concerns that streaming is proving unsustainable for creators, and for songwriters in particular. When asked about the suggestion that streaming only benefits the top 1% of creators, Wahlforss said he sees the model as more egalitarian.

“We certainly stand for more diversity and richer consumption and discover of new genres and artists,” he said. “We are focused very much on growing the pie. That will allow for many, many more people to [benefit].”

Wahlforss also claimed that streaming will ultimately not just reverse the decline in recorded-music revenues since the millennium, but will push the industry to new highs.

“Last year things turned and this year I think we are going to see pretty healthy growth on the revenue side for the industry,” he said. “For the next 10 years, you can see steep growth. We are going to surpass the all-time peak we had [16] years ago. That is what we are focused on; bringing in revenue and growing the audience.”

Eamonn Forde
READ MORE: Analysis News
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