Soundcloud saved with $170m investment

Aug 14, 2017 | Content marketing, E-commerce and E-retailing, Mobile

Music streaming service Soundcloud has survived a recent money scare after securing a $170m (£135m) in investment.

Back in February 2017, the Spotify rival fired a large number of its staff in an attempt to cut costs.

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

However, 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.

SoundCloud has just received an investment of $170 million a “global merchant bank” called The Raine Group and a Singapore-based investment company called Temasek.

As part of this new investment, former Vimeo executives Kerry Trainor and Michael Weissman will be stepping in as the new CEO and COO (respectively), while SoundCloud co-founder Alexander Ljung will step down as CEO and become chairman of the board, and other co-founder Eric Wahlfross will stay on as chief product officer.

In a statement, SoundCloud said that this new investment will “ensure a strong, independent future” for the company, while also “funding deeper development and marketing of its core tools used by millions of audio creators.”

“Soundcloud is here to stay,” wrote Alexander Ljung, the company’s chairman, who as part of the deal is stepping down as the firm’s chief executive.

Concerned users had been backing up their Soundcloud uploads, worried the site would go offline.

“This financing means Soundcloud remains strong and independent,” Ljung wrote in a blog post.

“Over the last few weeks, I’ve been moved by the outpouring of commentary around Soundcloud’s unique and crucial role in driving what global culture is today (and what it will become tomorrow).

“You’ve told me how, without Soundcloud, there would be a giant gaping void in today’s world of music. We can’t have that, and I’m happy to once again say that won’t be happening.”

The company will see considerable changes in leadership. Mr Ljung will be replaced as chief executive by Kerry Trainor, the former boss of video-sharing site Vimeo. Mike Weissman, also formerly at Vimeo, will become Soundcloud’s chief operating officer.

Read the blog post here

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