SoundCloud in trouble after $70m losses in two years

17/02/2016

Soundcloud is facing financial turmoil after a news report revealed that the music streaming service lost of $70m over two years.

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New financial records released by SoundCloud show that the company has nearly doubled its lossesfrom 2013 to 2014—those two years combined account for a total of €62.1 million ($70.3 million) in losses.

Soundcloud is popular with independent music articts and DJs worldwide, with many using it to share and comment on each other’s work.

Howqever, the berlin-based firm has struggled to convert that popularity into any meanful revenue. As a "freemium" service, most people use the site without paying.

With mounting losses, the company’s board of directors wrote that there are "material uncertainties facing the business."

As Billboard reported, "SoundCloud was widely reported to have 175 million users globally around the end of 2014. But its average revenue per user, or ARPU, was just 11.2 cents."

By comparison, its closest rivals, Pandora and Spotify, have ARPUs of $11 and $27, respectively.

Just last month, SoundCloud confirmed that it took on $32 million in debt financing in 2015. But the company has been trying to put a positive spin on some dire financial news, citing recent licensing deals with record labels.

"Over the past year, we’ve continued to bring partners from the music industry onto SoundCloud," spokeswoman Brielle Villablanca wrote in a statement sent to Ars.

Strangely enough, employee wages have increased 42.5% during the given period, reaching a yearly average of €79,980 ($90,000) per employee.

"We’ve signed deals with PRS and UMG/UMPG, to add to the nearly 200 deals we’ve already signed, including those with Warner Music, Merlin and NMPA, as well as MCNs and independent creators," she said. "We’re focussing on enabling creators to get paid for their creativity, and on building a financially sustainable platform that our community can enjoy for years to come."

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