Saving SoundCloud
For those already familiar with SoundCloud, feel free to skip ahead to “What makes SoundCloud unique?” For those deeply familiar with SoundCloud, feel free to skip ahead to “Saving SoundCloud”.
Table of Contents
- A brief introduction to SoundCloud
- What makes SoundCloud unique?
- Crisis, Summer 2017
- The Problem
- Saving SoundCloud
- Developing the SoundCloud community
- Improving music discovery on SoundCloud
- Reorienting the business model
- Parting thoughts
A brief introduction to SoundCloud
SoundCloud is an audio streaming platform that allows creators to upload original sounds, and users to stream these tracks. It’s most commonly known for its role in the indie/underground music scene, as many creators begin their careers on the platform. SoundCloud is available through a website and a mobile app.
Fast Facts:
• 175M+ global users reached every month
• 76M+ monthly US users
• 10M+ creators heard every year
• 120M+ tracks uploaded
SoundCloud users are both listeners and creators.
Listeners have access to a plethora of creator-uploaded content, whether it be music or podcasts. Although SoundCloud holds a smaller selection of mainstream music than other streaming services, the platform boasts a substantial array of underground music unavailable on other platforms, whether it be rising independent artists, remixes, mixes or live sets. For that reason, SoundCloud tends to attract a younger demographic of listeners interested in electronic and hip-hop music.
Any user can become a creator: SoundCloud allots each user 3 hours worth of free uploads. The barrier to entry is practically nonexistent, unlike other streaming platforms which require a more complex registration process for artists. Thus, SoundCloud has become a home to independent artists — from bedroom producers to underground producers — who begin their musical careers on SoundCloud’s free plans. Notable artists who have risen to popularity through SoundCloud include Kygo, Kehlani and Post Malone.
The business model
SoundCloud’s business model revolves around a paid subscription service and advertisements. The platform offers subscription plans for both listeners (SoundCloud Go) and creators (SoundCloud Pro); these subscriptions are the main revenue drivers. Separately, advertising opportunities on the platform also contribute to revenue.
Due to the company’s recent shifts towards monetization (SoundCloud Go was introduced in 2016), company costs are primarily focused on technology, people, marketing, and securing licensing deals with major record labels.
What makes SoundCloud unique?
SoundCloud’s greatest strengths lie in these two features:
1) Ease of music discovery
2) Democratic, open community
Ease of music discovery
SoundCloud’s most unique feature is Stream. Stream serves as a Facebook news feed for music: it’s an endless scrolling feed of new tracks by artists you follow. Stream is supplemented by the Repost feature: a track appears on your Stream when it’s first posted; but also when someone you follow reposts the track. Thus, Stream doesn’t just expose you to the content of artists you follow: it exposes you to their tastes in music, too.
A quick example: You follow X — a deep house producer — and he regularly reposts music by fellow deep house producers Y and Z, whom you do not follow. X happens to also like downtempo music, and will occasionally repost tracks by ambient producers A and B. Through X’s reposts on your Stream, you’re not only exposed to Y and Z’s deep house tracks, but also to ambient tracks by A and B. Let’s say you like all of those reposted tracks, and end up following Y, Z, A and B. Now you’re exposed to all four artists’ music — and their respective network of reposts as well.
Stream doesn’t just expose you to the content of artists you follow: it exposes you to their tastes in music, too.
SoundCloud’s cycle of reposting and discovery ensures that your Stream is always flooded with new content — content both from within your network (creators you follow) and beyond. It’s remarkably easy to discover new music, and SoundCloud is one of the best places to do that.
Community
SoundCloud is an inherently democratic platform. Anyone can upload his or her creations to the platform without the need for a record label. There’s a general sentiment that anyone can make it on SoundCloud: many popular artists trace their roots back to the platform.
More importantly, SoundCloud is built upon features that fundamentally engender a sense of community and openness. There is no wall of separation between creators and listeners: a creator account is exactly the same as a listener account, except for the fact that it contains uploaded tracks. Artists can comment, like, and repost tracks. They can follow other users. And unlike Spotify’s generic, insipid artist profiles, SoundCloud profiles feel deeply personal. Listeners can go to a creator profile and see the creator’s likes, reposts, and comments; they can even message the creator if they so choose. Creators can write a fun bio. These features create a unique connection between listeners and creators. Artists aren’t on some higher level than you: it feels like everyone’s on the same playing field.
On SoundCloud, there is no wall of separation between creators and listeners.
Crisis, Summer 2017
Despite reaching 175M+ users every month, SoundCloud has suffered losses year after year: in 2015, the company posted a $54 million loss. Even after deals with major record labels and the introduction of a paid subscription service in 2016, SoundCloud laid off 40% of its workforce this past July. In August, SoundCloud received a $169.5 million emergency injection that led to CEO Alexander Ljung stepping down. The company, once valued at $700 million, is now valued at $320 million.
The Problem
SoundCloud has always struggled with profitability. The record label deals and introduction of SoundCloud Go (a paid subscription service for listeners) in 2016 was an effort to counter that problem with additional monetization.
Unfortunately, the introduction of SoundCloud Go was a disaster: it not only failed to satisfy creators, but alienated listeners as well. The subscription service revolved around access to the major record labels’ libraries of mainstream music already available on other streaming platforms. However, this access required deals with major record labels, and these deals led SoundCloud to aggressively — and recklessly — pursue cases of copyright infringement, causing countless remixes and mixes to be taken down. The content identification system used was so unreliable that it often resulted in faulty takedowns of tracks: in many cases, artists had their own work taken down. Worse still, SoundCloud failed to make themselves available, resulting in faulty takedowns staying for days on end.
Not only that, SoundCloud continued to place ads on artists’ content while offering little to no support with monetizing their uploads. As of now, track monetization is only available to On SoundCloud Premier members — an invite-only program. Even then, the royalty payouts are negligible compared to other platforms. As producer Jai Wolf stated, “I don’t care about royalties off SoundCloud because it’s almost negligible.”
It was clear that SoundCloud was shifting its business model towards that of a streaming service like Spotify and Apple Music. After all, SoundCloud Go’s main selling point was access to a music catalog that “includes a slew of new tracks and albums from the biggest names in music” — in other words, access to mainstream music. This was a massive change in SoundCloud’s identity. No longer was the platform a haven where indie, non-mainstream music thrived, where listeners and creators interacted together. SoundCloud was trying to become a streaming service like so many of the ones already in existence. It was selling out.
SoundCloud was no longer a haven where indie, non-mainstream music thrived, where listeners and creators interacted together.
Users felt angry and betrayed. Through the copyright takedowns, SoundCloud was cracking down on the unofficial remixes and mixes unavailable on any other platform–the very things that drew users to SoundCloud in the first place. Artists were angry that they couldn’t properly monetize their music, and now their work was being taken down.
The introduction of SoundCloud Go seriously undermined user loyalty. The platform’s most passionate users weren’t sure what SoundCloud was anymore: it didn’t feel like the SoundCloud they knew and loved. An exodus of listeners and artists alike departed for greener pastures — whether it be Spotify, Apple Music or Google Play Music.
“I don’t know how anyone could think SoundCloud could pivot from DIY, user-uploaded content to a functional (let alone competitive) retail service overnight. And the change disregarded what made people mess with SoundCloud in the first place… it tried to be all things to all people, yet the end results were alienating on all sides.”
— Nick Catchdubs, co-founder of label Fool’s Gold
Saving SoundCloud
SoundCloud was never meant to be a streaming service like Spotify and Apple Music: it’s simply not built that way. Spotify and other streaming services have always been centered around serving as music catalogs: they’re music players, and in this respect, these companies are miles ahead in user experience and interface design. SoundCloud is a community: its features lends itself towards music discovery and user interactions. The platform was built for listeners and creators, not just the listeners.
Spotify and other streaming services serve as music players. SoundCloud is a community.
In order to regain user loyalty, SoundCloud needs to restore its original identity by building upon the very music discovery and community features that make it unique. Then, the company should recenter its business model around this identity.
The following sections detail my suggestions for each of these steps: building upon its community and music discovery features, and reorienting its business model.
Developing the SoundCloud community
Music is inherently social, and users are drawn to SoundCloud’s democratic community and culture of expression. The fact that users — creators and listeners alike–can express their musical tastes and opinions through public likes, comments, and reposts is unlike anything other platforms do. If SoundCloud wants to build a loyal, monetizable customer base, the platform should further develop its community features.
Suggestion 1: Adding emoji reactions to tracks
What if users could react to tracks with emojis, like Slack’s message reactions? Right now, there isn’t really a way to express more nuanced reaction to a track: it’s a Like for something you like, a Repost for something you really like, and a Comment for anything else. Emojis concisely capture more emotion than any word can: the emojis 🔥 😍 💘 can represent enthusiastic reactions, while 😶 😕 can represent more lackluster responses. Users may even use different emojis for different artists: Skrillex, for example, is commonly associated with alien designs, and fans may choose to react with 👽 as his unique equivalent of the 🔥 reaction.
Suggestion 2: Encourage internal sharing of music
SoundCloud doesn’t encourage sharing music within the platform. Currently, if users want to share a track with friends, they’ll use an external messaging service to send a link to the track. SoundCloud’s own internal messaging is clunky, obscure and rampantly abused by spambots.
For one, SoundCloud should implement shared playlists. Building a playlist with friends is a fun and easy way to share songs and music tastes. Collaborative playlisting is already a feature on Spotify.
SoundCloud also needs to revamp its messaging system. Users should be able to message more than one user at a time, so that friends can create groupchats to share and discuss tracks with another. Furthermore, SoundCloud should add a ‘Message’ button under each track, similar to the ‘Send To’ button under each Instagram post. This will allow and encourage users to instantly message tracks to friends.
That being said, these features can easily be abused by the same spambots already overrunning the platform. I think it would be wise for SoundCloud to implement some sort of friending feature so that users can only tag and message users they’ve friended on SoundCloud. Developing this social aspect will further the platform’s community feel, and can lead to other interesting social/community explorations.
Suggestion 3: Develop opportunities for listener-creator interactions
The lack of boundaries between creators and listeners on SoundCloud is highly unique. It creates a closer bond between creators and followers. As a listener, it feels amazing to comment on an artist’s track and receive a response.
SoundCloud needs to create more opportunities for interactions between listeners and creators. Catalyzing these interactions will increase user engagement on the platform. Moreover, it’ll help creators develop a closer relationship with their fans. For many of the lesser-known indie creators on SoundCloud, these interactions will be invaluable in building an initial fanbase.
A few examples of what these interactions could look like:
- Exclusive pre-streams of new music for a creator’s followers
- Allowing creators to poll followers (ex: “Who should I collaborate with next?”)
- Giving each creator a blog section on their profile, where they can write short blurbs/updates for their fans
Improving music discovery on SoundCloud
SoundCloud’s Stream and Reposts can be improved. Users go to SoundCloud to hear the latest hot tracks, and the platform would do well to make this discovery easier for them.
Suggestion 1: Implement custom Streams
Surfing through Stream can be overwhelming: it’s often cluttered by reposts, and scrolling through can take the longest time. What if users could create custom Streams that filter tracks by specific criteria? For example, users could create a “No repost” Stream, a “Remixes” Stream, a “Live Sets & Mixes” Stream; furthermore, they could create Streams containing music from certain groups of artists — an ‘Indie Electronica’ Stream that only displays tracks from artists of that genre, or a ‘Favorites’ Stream that only displays music from their favorite artists. All of this would make it easier for listeners to discover new music efficiently.
Suggestion 2: Optimize Stream exploration
Another Stream optimization. The top of each Stream should list the number of new items added to the Stream since a user last checked it. Each Stream should also have a marker indicating where a user last left off: clicking the marker will take them instantly to that part of the Stream.
Suggestion 3: Offer discovery options for casual users
So much of SoundCloud is self-exploration. It takes time and effort to go through Streams: and not all users have the time or energy to dig through. There are simpler forms of music discovery — namely curated playlists– and SoundCloud would do well to promote them. The platform could, for example, feature curators accounts and select playlists under the Discover tab (oddly enough, curated and personalized playlists are available on the mobile app but not the website).
Reorienting the business model
SoundCloud offers paid subscriptions for both listeners (SoundCloud Go) and creators (SoundCloud Pro). The platform is struggling to monetize because the premium features that come with these paid subscriptions aren’t features users actually want.
SoundCloud should center its business model around its community and music discovery aspects. These are the parts of SoundCloud that attract its users — and if users are going to spend any money on the service, it’s going to be because they want to enhance this experience.
Below, I examine SoundCloud’s paid subscriptions and offer ways to improve them.
SoundCloud Go: Paid subscription for listeners
For listeners, the first paid tier SoundCloud Go offers offline and ad-free listening. The second paid tier, SoundCloud Go+ offers additional access to “premium tracks” — mainstream tracks found on other streaming platforms.
SoundCloud Go+ is an ill-advised attempt to compete with the streaming service giants: Go+ charges the same $9.99/month price as Spotify Premium and Apple Music for access to the same mainstream tracks found on those streaming platforms. As I explained earlier, SoundCloud cannot possibly compete with these platforms in terms of mainstream music streaming. Moreover, the platform’s core listeners aren’t even using SoundCloud for mainstream music. If that’s what they wanted, they’d be using the likes of Spotify over SoundCloud. These listeners are on SoundCloud to discover and stream music they can’t possibly find on any other platform. Ad-free listening? Great. Offline listening? Perfect. But they’re not going to pay an extra $5/month for the single additional feature of access to mainstream music.
Instead, SoundCloud should revolve SoundCloud Go around features that its core listeners are willing to pay for — features that will enhance the listener’s experience and make it easier for listeners to discover and share new music. Custom Streams is one such feature.
Here’s what the Go plans could look like:
SoundCloud Go
- Offline listening
- Ad-free listening
- 2 custom Streams
SoundCloud Go+
- Offline listening
- Ad-free listening
- Access to 30M+ premium tracks
- Unlimited custom Streams
- Other music organization & discovery features
SoundCloud Pro: Paid subscription for creators
SoundCloud Pro and Pro Unlimited provide creators with better analytics, and some profile control options.
Honestly, the analytics offered by SoundCloud Pro and Pro+ are ridiculously underwhelming. Spotify for Artists offers all of these analytics — and so much more — for free. These analytics include fan engagement data, where fans are classified into different engagement categories; the demographics of your listeners (gender, age group, etc.); the other artists your listeners are listening to; and your traffic sources across the platform. What’s more, Spotify has been using Spotify for Artists to test artist-focused initiatives such as Fans First, which helps artists market their live performances.
Next to Spotify for Artists, SoundCloud Pro is pathetic. SoundCloud is essentially charging creators for access to an underwhelming set of statistics and minor profile-customization options. These features are marginally helpful to creators. It’s no surprise many artists are leaving SoundCloud for bigger streaming services that offer significantly better artist support.
For starters, SoundCloud needs to seriously upgrade its analytics system. Even without comparing it to Spotify, the platform’s current analytics system is awful. At the very least, SoundCloud needs to offer creators a set of statistics comparable to that of Spotify, and offer these statistics in the Pro plans.
The Pro plans should also include features that can actually substantially improve the creator experience, features that help smaller artists grow and develop their careers. These creator-oriented features could come in the form of a pay-what-you-want option for track downloads, profile integration with tour dates, or access to the additional listener-creator interactions I suggested earlier.
Here’s what the Pro plans could look like:
SoundCloud Pro
- Spotify-level analytics
- Pay-what-you-want option for track downloads
SoundCloud Pro Unlimited
- Spotify-level analytics, and perhaps some more
- Pay-what-you-want option for track downloads
- Profile integration with tour dates
- Access to additional listener-creator interactions, such as a profile blog and the ability to poll followers
Parting thoughts
In its current state, SoundCloud serves as an accessory for many users. The platform is a stepping stone for creators, who aspire to gain a following on the bigger streaming services (where artist support and royalties are significantly greater). And for many listeners, SoundCloud is a supplement to whatever main music player they use. Much of my thinking revolved around the question, “how can we make SoundCloud a destination and not a pit stop?”
How can we make SoundCloud a destination and not a pit stop?
My answer is to focus on the very features that make SoundCloud unique, and build its business model from there. Instead of trying to become a music player and competing with the streaming service giants, SoundCloud should turn itself into a one-stop destination for music sharing and discovery, building a unique community with an engaged user base.
That being said, I’d be naive to think that my advice will instantly solve all of SoundCloud’s problems. The music industry is a constant battleground against the major record labels, and there will be legal battles to be fought. Furthermore, SoundCloud suffers heavily from a general lack of UI/UX (for example, a collaborative track can only appear on one creator profile, not the profiles of all creators involved). Lastly, I think SoundCloud still needs to focus on helping its creators thrive. The new Pro features I suggested will help, and an increase in SoundCloud’s subscriptions will increase royalty payouts, but the platform would do well to actively support its artists — it is, after all, the place where many creators start out.
It’s easy to say SoundCloud will always be competing against the streaming service giants. And to some extent, that’s true. These services offer better support to artists: just looking at Spotify, its comprehensive analytics, higher royalties and robust Spotify for Artists program make it a significantly more sustainable platform for creators. On top of that, listeners only have so much time — and the bigger streaming services will always hold more of the average music listener’s library than SoundCloud. Yes, SoundCloud offers underground music unavailable on other platforms — but even these indie musicians are now moving towards the bigger streaming services.
At the same time, SoundCloud is also competing against other music discovery platforms. SoundCloud’s currently one of the best places to discover music, but it isn’t the only place listeners are going to for new music. YouTube’s community of music promotional channels — boasting millions of subscribers — provides a curated selection of the latest tracks. Spotify has also implemented personalized, discovery-centered playlists, such as the wildly successful Discover Weekly and newly-released Release Radar.
SoundCloud will succeed by building upon the very music discovery and community features that make it unique.
Standing alongside its competition, SoundCloud seems doomed to fail. Spotify, especially, is rapidly catching up in the very areas SoundCloud succeeds in. But Spotify will never be as interactive or community-centered as SoundCloud: the streaming giant is more of a musical inventory than a community. And that’s how I believe SoundCloud can succeed: by building upon the very music discovery and community features that make it unique.
I’m a senior studying Computer Science & Visual Arts at Duke University. I’m deeply passionate about startups, technology and empowering artists. Feel free to reach out via LinkedIn — I’d love to chat.
Currently exploring full-time Product Management opportunities for 2020.
