SoundCloud employees received an email yesterday from CEO Michael Weissman, who told them “we have decided to make reductions to our global team that will impact up to 20% of our company.” Weissmann also published a version of the email to his personal LinkedIn account. It’s not clear how many people will be affected, but it will be a significant number: in its last consolidated accounts report to the UK’s Companies House, which covered 2020, SoundCloud said it employed 392 people, and insiders told Music Ally that today it’s “around 400”. If true, the layoffs will affect around 80 people.
Employees who are to be cut will be informed over the next few days, and into next week. Billboard reports that employees in the U.S. and U.K. will be affected, and Berliner SoundCloud staff are expecting news of layoffs too.
Unlike in 2017, when the Berlin-based company had to urgently lay off 40% of its staff – 173 people – in order to avoid going under, this time the significant axing of workforce is part of a wider tech industry pattern. On the same day as SoundCloud announced its cuts, software company Oracle was reported to be laying off “thousands” of employees and stock and crypto trading app Robinhood cut another 23% of its staff. Back in 2017, news of SoundCloud’s drastic cuts was greeted with shock, but in 2022, a quick glance at the charts on websites like layoffs.fyi shows a sharp uptick in tech layoffs across the board.
There are other differences this time: back in July 2017, we asked what SoundCloud could do to survive, suggesting that it “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.” Skip forward five years, and that’s exactly what the company has done: belts have been tightened, key new execs have joined, Troy Carter was added as as board director, launched user-centric “fan powered royalties” with the support of WMG, made some useful acquisitions like Musiio and Repost Network, and it announced that revenues had grown by 31% to €193.5m in 2020.
Weissmann framed the layoffs as part of this forward momentum, saying, “we will continue to embrace the challenge of leading what’s next in music.” This sentiment is presumably of little consolation to those who will be losing their jobs just as the economy appears poised to teeter into stagflation, but SoundCloud as a business does seem to be in a more resilient position than in the past. For the wider industry, having a healthy SoundCloud that brings innovation to artists and consumers is a good thing.
SoundCloud is the first major music-centric tech company to announce major staff cuts like this, but will it be the last? Spotify recently announced it will slow its hiring by 25%, and TikTok is apparently “restructuring” its workforce. It’s a truism that all big businesses are now “tech businesses”, and some of those tech businesses are acting quickly to slash workforces in order to ride out a presumed economic downturn. It’s unclear if SoundCloud’s competitors – which given the diversity of its services, is a broad set of businesses – are planning similar cuts, but one of the traits of SoundCloud’s recent approach to business has been to make quick, bold decisions. We’ll soon find out how confident other music-tech companies are of their ability to survive the economic conditions as-is – or if they need to make cuts too.
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