Is it clear skies ahead for SoundCloud?

SoundCloud CEO & CTO, Eric Wahlforss (left) Alexander Ljung (right) (Photo by Steffen Jänicke for Forbes)

SoundCloud CEO & CTO, Eric Wahlforss (left) Alexander Ljung (right) (Photo by Steffen Jänicke for Forbes)

SoundCloud CEO & CTO, Eric Wahlforss (left) Alexander Ljung (right) (Photo by Steffen Jänicke for Forbes)

Is it clear skies ahead for SoundCloud Ltd, or is a major storm on the horizon? There has been a major buzz on the interwebs, with apocalyptic tweets, the sky is falling Facebook post, and blogs stating that the “world’s leading music and audio streaming platform” days are numbered. Our friends over at TechCrunch, citing inside sources, went in on the music streaming tech giant, and described a tense scene at the SC offices with security personnel on hand and employees on the outs wondering why they weren’t given a heads up. The TechCrunch article contains a suggestive permalink post name that reads “soundshroud,” a clever play of words no doubt. I’m hip! I see what you did there.
A clever URL Permalink making reference that the company SoundCloud has something to hide.

According to Bloomberg, SC stated in January that the company was running out of money. Founded, 2007 in Stockholm Sweden by sound designer Alexander Ljung (chief executive officer), and Eric Wahlforss (chief technical officer), the pair would later establish headquarters in Berlin and eventually see an expansion of branch offices in New York City, San Francisco, London, Sydney, and Los Angeles (an apparent one-man-and-a-cat operation in a residential neighborhood). In what is described as a all hands meeting via video conference from its Berlin headquarters, everyone got the news that the company would be laying off 40% of its staff, roughly 173 employees and closing its London and San Francisco offices. Nothing like receiving bad news via video conference. “Sorry your dog died, your girlfriend dumped you for your slightly more handsome flat mate,” or “Oh yeah! Kick rocks you’ve been shit canned!” No word on the one man and feline operation in LA.

In the competitive world of music streaming, we’ve spent the last several years growing our business, and more than doubled our revenue in the last 12 months alone.

– Alex Ljung (SoundCloud CEO)

In a Soundcloud Blog post dated July 6, 2017, CEO Alex Ljung stated that the business doubled revenue in the past twelve months, which is a contrast from the scathing reports online that claim the company only has enough money to last until their forth quarter which is less than 50 days away. Don’t count SC out just yet, as they have proven to be a ripe target for investors. In January 2014, the Wall Street Journal reported, that SC managed to raise funding totaling $60 million from Institutional Venture Partners (IVP), and the Chernin Group, pushing their value to $700 million. In June of 2016 Twitter invested $70 million, which held SoundClouds value at $700 million, which is the same value investors placed on the company back in 2014. Two years prior, Twitter was considering buying SC, but walked away from the deal. Most recently in March of this year, Reuters reported that SC had raised $70 million in debt from Ares Capital, Kreos Capital and Davidson Technology, in order to meet their expected 2.5 expanding revenue growth for 2017. SoundCloud, which has been feeling the heat from other streaming giants, such as Apple, Pandora and Spotify, kicked in with their own subscription service in hopes to attract new listeners and convert those already free account holders. Known as “Soundcloud Go,” this service features an expanded catalog of tracks, and contains new features and functionality, like offline listening without a cell signal or Internet connectivity. The tiered plans consist of free plan with ads, a basic $4.99 per month service with no ads, but limited to 120 million songs, while the $9.99 plan offers full access to 150 million tracks, with no ads or previews, and to sweeten the deal SC throws in a 30-day free trial.

Hey everyone,

There’s an insane amount of noise about SoundCloud in the world right now. And it’s just that, noise. The music you love on SoundCloud isn’t going away, the music you shared or uploaded isn’t going away, because SoundCloud is not going away. Not in 50 days, not in 80 days or anytime in the foreseeable future. Your music is safe.

Along with each of you, we’ve built this incredible creative community of artists, podcasters, DJs, producers and more who are the driving force in pushing culture forward in the world. That’s not going to change. Last week we had to make some tough decisions to let go of some of our staff, but we did this to ensure SoundCloud remains a strong, independent company.

Thank you for the outpouring of love and support. Some of you have asked how you can help–spread the word that we’re not going anywhere and keep doing what you’re doing–creating, listening, uploading, sharing, liking, and discovering what’s new, now and next in music. SoundCloud is here to stay.

July 14, 2017 MUSIC

During a time of crisis, a CEO has the difficult task of reassuring remaining employees, investors and the public at large that everything is going to be all right and service will not be interrupted. Alex Ljung (CEO) went to the company blog in an attempt to calm the storm and keep the naysayers at bay. He proceeds to reassure everyone that the company will remain strong and independent, and is not going away anytime soon. He goes on to tell users to keep uploading, liking and sharing music, thus keeping a strong creative community alive. I’m sure this happens all too often, a start up gets a little too big for its britches, possibly expands a little too quickly, and begins hemorrhaging money due to huge salaries, perks such as headphones and Apple laptops, plush office spaces, fully stocked kitchens, and catered lunches. To add further fuel to the fire, the February departure of COO Marc Strigel and Finance Director Markus Harder, could be a sign that confidence is not high in SoundCloud’s recovery. In May SoundCloud announced that its Chief Content Officer Stephen Bryan would also be leaving the company. Bryan was instrumental in the SoundCloud Go roll out, by closing deals with record labels and publishing companies. Back in March SC inked a licensing deal with Sony Music after a year long process of talks and negotiations, in which Bryan was a key figure in sealing the deal. Similar deals were struck with Warner Music, Universal and a host of independent labels, which would have been crucial to launch such an ambitious project and going head to head with Apple, Spotify and Pandora. Overall, I personally don’t think SoundCloud is going anywhere, but the service as you know it may change as restructuring occurs, or the company get gobbled up by a larger competitor.

SoundCloud sinks as leaks say layoffs buy little time (TechCrunch)
SoundCloud (Wikipedia)
SoundCloud Cuts 40% of Staff in Push for Profitability (Bloomberg)
Music-Sharing Service SoundCloud Raises New Funds at $700 Million Valuation (The Wall Street Journal)
Twitter has invested in music streaming service SoundCloud (Recode)
Music streaming firm SoundCloud raises $70 million in debt (Reuters)
SoundCloud Announces Chief Content Officer Departure (SoundCloud Press)
SoundCloud Signs Licensing Deal With Sony (The New York Times)
SoundCloud Blog

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