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SoundCloud may not be free anymore, loses £18m

SoundCloud may not be free anymore, loses £18m

by Salil Tembe2014/10/16

SoundCloud, the popular music streaming website where a lot of artists upload their music and the listeners definitely enjoy this free service. The amazing music streaming service seems to be in a rather weird situation. Ever since SoundCloud opened its doors in 2007, it has been growing tremendously every year. Generally when a company grows, its revenue increases and that kind of growth is good for its employees and it is definitely good for the company as a whole. Things are apparently the opposite when it comes to SoundCloud. The more the people use SoundCloud, the lesser money they make. It is probably their business model which has got them in this position or it could be something else. Let us dive deeper.

Every year the company has lost money as it kept growing and growing. The company revenue has been up as expected, but the operating costs seems to grow exponentially. In 2013, SoundCloud spent nearly £18.2 million on operations cost. That is, the operating loss equates to nearly 100% up from the previous year.

SoundCloud often raises money through investments, but they seem to dry up pretty fast as more number of customers flock on to use their free service. This means, that every year the company has to raise more and more money while not really making any profit at all because they end up spending money on keeping their service up and running.

SoundCloud has been making deals with top brands such as Red Bull, Comedy Central and Jaguar. All the three expect SoundCloud to give them cheaper deals which will push the company further down the hole. The top brands will pull tremendous amount of users to SoundCloud which will drive the operating costs even more while the top dogs refuse to pay the full price. It is a good thing that the deals will not last much longer because SoundCloud is considering breaking them off to prevent itself from dropping lower into the pit any further. Sony and Warner are also among the list of companies who expect SoundCloud to lose money for them.

SoundCloud is a service that does not really monetize from its listeners. It strikes deals with artists for distributing their music, but apparently this can no longer hold the company together unless it decides to start paid services for their listeners. SoundCloud is expected to have nearly 200 million users per month and that will keep growing. It is clear that the operating costs will rise even further and SoundCloud may not be free anymore.

The popular band Foo Fighters released the first episode pertaining to their new album “Sonic Highways” on HBO, today. Foo Fighters have used SoundCloud to freely let their fans enjoy their music. You can find their previous albums at their SoundCloud profile which also includes the very last album “Wasting Light” that was released nearly 3 years ago.

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About The Author
Salil Tembe

Salil is an electronics engineer who has a passion for expressing his love for technology through writing. He firmly stands for open sourcing everything that makes our lives better.

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