Fixing SoundCloud
Thomas Euler

I admire the enthusiasm for the cut out the middleman (labels) solution being promoted, however, it is just not realistic. Also, under issues I saw no mention of the illegality on top of which SoundCloud amassed such a large userbase over a decade? Soundcloud only ever got to 140M montly users because people found all the music they wanted FREE as songs uploaded by other users — illegally. Not disimilar to what YouTube did for years before being sued for $1Bn by Viacom. A fraction of the SoundCloud audience in 10-years might be the independent labels or upcoming artists looking for exposure, but the vast majority are free-loader consumers.

Look at what has happened to SoundCloud since they were forced by the major record labels and the industry to license music and remove the free music off the platform: the free-loading users simply left, they’ve gone and now there are just 70M monthly actives reportedly (yes, 50% gone!) and the trajectory is continuing downwards. They got nice offices in Berlin though.

SoundCloud built a piracy platform. They never built a viable music subscription offering that both the labels and consumers can work with like Spotify has. The SoundCloud product and user-experience are now a mess because its beginnings as the coolest place for DJ & Mixes have been screwed up by the realisation that they need to license content, so they slapped on a subscription paywall.

A good point Tom Conrad, co-founder of Pandora made to me on Twitter was: It is hard for SoundCloud to suddenly change into a legal subscription service and expect the major labels to forget about the Hundreds-of-Millions-of-Dollars of unpaid royalties and copyright infringements SoundCloud did for over a decade. No doubt Pandora is similar to SoundCloud in this respect and look at how that business is going.

Lastly, it is not necessarily a bad thing if SoundCloud goes out of business, artists have made no money from SoundCloud and they are never likely to do so.

My gut tells me Alexander Ljung is being disingenious. As he publicly proclaimed 40% staff cut was to help get to profitability — he didn’t mention that SoundCloud doesn’t have enough cash to get into Q4 2017 (a leaked company meeting memo shed light on this fact). Reports are that Llung is shopping around trying to find a buyer for SoundCloud. There is no business model, profitability is not on the cards, the 60% workforce left is NOT secure. They would be wise to find alternative employment. I predict this thing is done unless something drastic, like Google or maybe Twitter acquiring SoundCloud! If that happened, they would probably be able to acquire at a bargain price and Google could absorb all the losses necessary for years to come and rectify the business model to compete with Apple Music or Spotify.

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