Last August, SoundCloud launched its On SoundCloud initiative to run ads around the audio uploaded by some of its creators, and give them a share of the revenues. But how lucrative would those revenues be? Today, the company published some data.
Well, two numbers really: “Since the launch last August, things have been growing fast. We’ve signed up over 100 Premier Partners and paid over $1 million in advertising revenue to partners including labels, audio partners and emerging artists,” explained SoundCloud in a blog post.
That’s around $167k paid out to creators every month since the launch, on average. SoundCloud hasn’t said how it’s splitting the revenues from On SoundCloud – if it was taking a 30% cut, for example, that would indicate around $1.4m of advertising revenues since August. If it was taking a 70% share, that’d be more like $3.3m.
That’s small beans in the wider scheme of things: SoundCloud’s financial results for 2013 revealed overall revenues of €11.28m ($12.7m) and net losses of €23.11m ($25.9m). Advertising isn’t going to be paying the company’s content and hosting bills just yet, then. Bear in mind that On SoundCloud has only launched in the US so far: it’ll be expanding to more countries “later this year” according to the company.
Interestingly, the blog post’s success stories for musicians focus more on reach than revenues:
“On SoundCloud has led to the creation of native advertising opportunities with emerging artists and brands. With an exclusive track sponsored by Jaguar, London-based downtempo producer Sizzlebird got 1.3 million plays and doubled his followers in three weeks. In December, Green Label Sound launched the Open Call competition on the platform and in February Kelechi was announced as the grand prize winner. Also in December, Microsoft teamed up withJacques Greene to release an exclusive remix of “No Excuse” (one of his most well-known tracks), by Swedish producer Yung Gud — it got nearly 800,000 plays in just 18 days.”
Proving that it can build revenues as well as reach for musicians – not to mention labels and publishers – is SoundCloud’s key challenge in 2015, alongside proving it can move towards a sustainable business for itself.
More venture capital funding may increase its runway to that point: in December, the company was rumoured to be in talks for $150m of new funding that would value the company at $1.2bn. That would be on top of the $123.3m the company has already raised since being founded in 2007.
SoundCloud signed its first licensing deal with a major label – Warner Music Group – in November 2014, which included WMG signing up to the On SoundCloud initiative. At the time, it was suggested that WMG was getting an equity stake of between 3% and 5% in SoundCloud as part of the deal.
Talks with other rightsholders – including publishers, collecting societies and indie licensing body Merlin – are thought to be ongoing. Universal Music boss Lucian Grainge hailed SoundCloud’s potential “to create incredible revenue” last October, but expressed concerns about “what the business plan is going to be”.
For its part, SoundCloud has been standing its ground against claims it will be doomed without major label licences. “SoundCloud is not dependent on a full catalogue as much as other players in this space are,” said co-founder Eric Wahlforss in November.
“We have a lot of creators on the platform and only a tiny fraction of those are signed to major labels. We have a much broader content base. It’s really the depth of the content that differentiates the platform.”
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