SoundCloud’s path to profitability has been a rocky one, at odds with its otherwise highly successful platform that serves the twin interests of hosting and distributing artists’ music, and connecting it with a large audience. Its problems reached a nadir in 2017 when the company abruptly axed about 40% of its staff and investment groups Temasek Holdings and the Raine Group scooped up a large stake in the then-ailing business.
The platform’s story may now be shifting from “cautionary tale about the gulf between popularity and profit” to “case study in turning a business around.” 2021 was the year when SoundCloud seemed to be shifting onto the front foot, and under the new CEO Michael Weissman, has brought in some key new execs, added Troy Carter as board director, and launched user-centric “fan powered royalties” for some artists.
In a new interview with the Wall Street Journal, SoundCloud CFO/COO Drew Wilson suggested more forthcoming changes, including changes to pricing in early 2022, with the ability for artists to not only upload – but also distribute – some of their music for free. It’s aiming to “get you to move away from being shy about being a creator,” says Wilson, who didn’t mention if users would be able to upload more music for free on top of this enhanced distribution offer. Currently users can upload three hours of music for free, and pay $12 per month to upload more. Distribution starts at $30/year via its Repost service.
It also intends to solidify its relationships with artists and find more new talent on its platform, addressing a competitive advantage that SoundCloud has always had but perhaps never fully capitalised on: artists which later go on to become huge stars often upload their music first to SoundCloud.
Notably, Wilson says that the company is “at the doorsteps of break-even” and anticipates net profit by 2023. SoundCloud’s operating loss narrowed from €32.9m in 2018 to €23.8m in 2019, and its 2020 financial filings will be available at the end of 2021 – which will be seen as something of an acid test of the company’s ongoing turnaround.
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