Analysis

With 40% of employees laid off, what now for SoundCloud?


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It seems contradictory to describe SoundCloud’s announcement yesterday that it was laying off 173 staff as a shock but not necessarily a surprise.

That has been the most common sentiment in the responses to the news however: sadness and shock about the sudden scale of the layoffs, but less surprise that SoundCloud needed to reduce its costs, after a long period of uncertainty about the streaming service’s future.

We’ve had some clarity on how the layoffs compare to the overall headcount at SoundCloud, with Bloomberg noting that the company had 420 employees before the news – meaning that 40% of its staff will be leaving as part of the cuts.

Its report also claimed that SoundCloud’s subscription tier “hasn’t been as successful as executives hoped”, although it had no figures to accompany that claim.

CEO Alexander Ljung’s blog post about the layoffs has been picked over, particularly the sentences “we need to ensure our path to long-term, independent success” and “we’re on our path to profitability and in control of SoundCloud’s independent future”.

Coming just days after the company was rumoured to be the subject of acquisitive interest from Deezer, Apple and investment firms, the two mentions of an “independent” future have understandably set tongues wagging.

For some, this is an indication that that these interests, like past mooted acquisitions by Twitter and Spotify, have come to naught – and that SoundCloud was faced with having to slash costs to survive.

For others, it’s an indication of the opposite: that only a stripped-back SoundCloud will be able to seal the deal on its long-anticipated (if considerably less lucrative than was once hoped for) exit.

There remains a widespread assumption that *someone* will buy SoundCloud eventually, but with the main question being how late in the company’s trajectory that happens.

Taking Ljung at his word on SoundCloud’s desire to remain independent, however, there are plenty of other questions. Is that path to profitability driven by subscriptions – in which case how is SoundCloud planning to reinvigorate signups to its premium tier? – or by advertising, in which case how quickly and effectively can it roll its ads business out globally, given the layoffs?

How can SoundCloud launch new features that, rather than just me-too catching-up up with Spotify and Apple Music, build on the unique culture that made it stand out in the first place?

Reactions yesterday showed how much affection SoundCloud retains from digital-leaning people in our industry – even if often that affection is driven by SoundCloud’s earliest incarnation rather than its post-licences direction.

If the company can regain its mojo and keep the lights on as an independent service that also delivers meaningful income for artists, there will be plenty of people cheering.

In the meantime, we’re sure there will also be plenty of interest from other streaming services and music companies alike in the talented, passionate SoundCloud staff who lost their jobs yesterday.

Stuart Dredge

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