Last month, it looked like SoundCloud was about to shut down. Not long after that news spread, SoundCloud announced that it had secured a significant investment led by The Raine Group and Temasek. Today, about a month after the initial panic over SoundCloud’s potential shut down – it is clear that SoundCloud is still here.
SoundCloud announced on August 11, 2017, that it reached an agreement on a significant investment from global merchant bank The Raine Group and Singapore-headquartered investment company Temasek.
In connection with the investment, veteran digital media operators Kerry Trainor and Michael Weissman will join the SoundCloud team respectively as Chief Executive Officer and Chief Operating Officer.
The investment will ensure a strong, independent future for SoundCloud, funding deeper development and marketing of its core tools used by millions of audio creators – musicians, DJs, producers, labels, managers and podcasters – that fuel SoundCloud’s one-of-a-kind, creator-driven listener experience.
The investment and leadership plan was developed in close partnership with SoundCloud founders Alexander Ljung and Eric Wahlforss, who will both remain with the company. Alexander Ljung as Chairman of the Board, and Eric Wahlforss as Chief Product Officer.
In addition to the role of Chief Executive Officer, Kerry Trainor will also join SoundCloud’s Board of Directors. Michael Weissman, who worked closely with Kerry Trainor at Vimeo, will assume the role of Chief Operating Officer at SoundCloud.
SoundCloud’s ongoing demise has been a regular topic of coverage here at Podcaster News over the last few months. It seems like the Berlin-based music streaming service and podcast hosting provider just continues to slide ever deeper into the abyss.
The most recent report came earlier today, and this could be the big one for SoundCloud. The proverbial final nail in SoundCloud’s coffin. That big server in the sky where technology firms go when the VC runs out. The end.
SoundCloud recently entered talks with rescue investors Raine Group and Tamasek Holdings, and it looked like SoundCloud might be saved after all. But SoundCloud has taken a lot of money from a lot of different investors over the years. SoundCloud is so deep into funding rounds now that older investors have to approve any new investors that come on board. SoundCloud’s finances have been arranged so that newer investors get priority over older ones, and that means in the case of a fire sale or liquidation, Raine and Tamasek have much less to lose than the older, more established investors:
…the incoming ‘rescue’ investors Raine Group and Temasek would receive preferential treatment. Which basically means that other investors would be de-prioritized, receive worsened terms, and have a harder time recovering their cash.
…if the rescue package isn’t approved, the company won’t have enough money to survive. It would introduce a dangerous tailspin as employees jumped ship and the money dwindled to zero.
The crucial vote on whether or not to approve the rescue funding happens tomorrow, Friday, August 11th. If the rescue funding doesn’t go thru, SoundCloud will likely be forced to shut down the same day.
Things have seemingly gone from bad to worse for SoundCloud, the Berlin-based music streaming and podcast hosting provider. We brought you the recent news that SoundCloud would be deferring salary reviews for employees. It turns out “deferring salary reviews” was actually secret code for “about to lay off 40% of our staff and close some offices:”
The German-born streaming company has informed its staff today that 173 jobs are being cut, from a total headcount of 420.
The business will consolidate its operation across its New York and Berlin offices.
This consolidation will also close SoundCloud offices in San Francisco and London. A statement from SoundCloud cofounder Alexander Ljung acknowledged that choosing to lay off employees was a difficult decision, but it is part of SoundCloud’s plan to try and keep the company solvent:
In the competitive world of music streaming, we’ve spent the last several years growing our business, and more than doubled our revenue in the last 12 months alone. However, we need to ensure our path to long-term, independent success. And in order to do this, it requires cost cutting, continued growth of our existing advertising and subscription revenue streams, and a relentless focus on our unique competitive advantage — artists and creators.
Another report that surfaced in the wake of SoundCloud’s layoffs claims that the company only has enough money to operate until the beginning of the fourth quarter of 2017. If this is true, the company has a few months left before it may need to shut down completely.
If there’s any light at the end of SoundCloud’s tunnel, it comes from rumors that France-based music streaming service Deezer might buy SoundCloud. While Deezer does seem like a good match for the music side of SoundCloud’s business, Deezer didn’t do any favors for Stitcher after that acquisition (Deezer later sold Stitcher to Scripps/Midroll). Either way, the future looks very bleak for SoundCloud as a podcasting platform.
The topic of SoundCloud’s shaky financial future has been covered here often in the past. And the latest news to come out of the Berlin-based music/podcast distribution company doesn’t do much to improve SoundCloud’s outlook.
A Hacker News user known only by the username throwaway-sc posted this question to that website’s message board:
SoundCloud has deferred salary reviews until the next funding round is complete.
Over the last few years, travel between offices has been restricted to business critical travel only. More expensive food items have started disappearing from our kitchen.
Employees used to get a small bottle of champagne on their birthdays & employment anniversaries. This doesn’t happen anymore.
All of the above feels reasonable.
However, they recently announced that the July 1 salary review that everyone was promised will be deferred. There is no information about back pay or a date about when the next salary review will happen.
Salary increases are predicated on the next round of funding. They anticipate that the round will close over the next couple of months, if not weeks.
I’m sure that everyone here will have been in similar situations before.
What did you do? And, how did you decide whether to continue working or start looking for other opportunities.
It’s worth noting that this is an anonymous post on the internet. There’s no way to confirm its authenticity. In the replies that follow the original post, other Hacker News users condemn throwaway-sc for even mentioning his employer’s name.
But if this post holds any voracity, it proves what we probably already knew; SoundCloud is still struggling financially and will need to raise more funding in order to keep going. The company’s already gone thru multiple rounds of venture capital and debt funding. How much longer can SoundCloud continue to operate on borrowed cash?
It seemed strangely appropriate when rumors started circulating earlier this year that media-streaming service Spotify was contemplating a buyout of music/podcast-hosting company SoundCloud. In podcasting terms, the two companies have shared similar profiles as being on the edges of the podcasting space, without ever completely taking the full plunge into the industry. The potential acquisition felt right somehow, if only because it might bring the newly formed SpotiCloud (Soundify? That surely must already be taken.) more into the center of the podcasting space.
But that chance has been dashed, as Spotify has reportedly walked away from the deal with SoundCloud:
The companies were in advanced talks on a deal in September, the FT reported, as Spotify looks to compete with Silicon Valley titans such as Apple and Amazon in the competitive streaming market.
However, the deal has fallen through because Spotify did not want to slow its path towards a flotation with the costs and licensing agreements needed to buy SoundCloud, according to someone familiar with the matter.
The fates of both Spotify and SoundCloud have seemed uncertain for awhile. Both companies have struggled to turn a profit. Spotify is headed for an initial public offering, and it’s possible that taking the company public may save it long enough for the company to build some true staying power. SoundCloud, on the other hand, has taken on a lot of debt thru multiple rounds of venture capital funding. After being passed over on two high profile buyouts (first Twitter and now Spotify), SoundCloud’s next move is anyones guess.
I’m not sure what happens when two high-profile companies with seemingly obtuse profiles in the same industry collide in one headline. But that’s exactly what’s going on, as news began to leak earlier this week that music/podcast streaming service Spotify is in “advanced talks” to buy music/podcast distribution service SoundCloud.
Of course, this blog is focused on news about podcasting. And while both SoundCloud and Spotify have their own places in the current podcast market, it’s been a bit off an odd trip for both companies:
- SoundCloud began as a collaboration tool for musicians but later morphed into a music sharing and distribution hub, eventually adding support for podcasts. SoundCloud’s podcasting program was in beta for years before it officially launched. The company has been hemorrhaging money, burning thru multiple rounds of venture capital in an attempt to stay ahead of mounting financial pressure from the major record labels. SoundCloud launched its own premium music-streaming service and began running ads against content for non-paying account holders. Curiously, the company has mostly kept the music and podcasting sides separate. But apparently, embedded SoundCloud players featuring podcast episodes will automatically begin to play SoundCloud-hosted music files if the player isn’t paused after the podcast is finished. This can happen without warning, much to the chagrin of podcasters who thought they were embedding single-episode players onto their websites.
- Spotify is the Swedish-born music-streaming platform that perfected the idea of the Celestial Jukebox; Any song from any artist whenever you want it at the touch of a button. The company grew slowly as it moved into more markets around the world, finally pushing into North America five years ago. When Spotify announced in 2015 that it would be adding support for podcasts, it felt like this could be some seriously new ground for podcasting to break. But Spotify has chosen to work with a small group of content partners and the company has been very slow to add new shows to its podcast directory. And while Spotify has done better in the revenue department than SoundCloud, Spotify was still taking on new debt from investors earlier this year.
Just what any of this means for podcasting is anyones guess. Spotify could try to absorb SoundCloud into its existing platform, or it could let SoundCloud continue to operate independently. Tho, I’m not sure I like the name SpotiCloud. However, Soundify does have a nice ring to it.
News items about SoundCloud are so repetitive, they’re starting to sound like a broken record. We’ve reported more than once about how either SoundCloud is rapidly burning thru the money it has, or that it’s taken on more debt in the form of venture capital. This week’s SoundCloud news is focused on the second of those two, as apparently Twitter has invested $70million dollars in the audio platform.
This fact on its own is amusing considering Twitter itself has yet to actually turn a profit. Also, this isn’t the first time SoundCloud and Twitter have been linked financially. In 2014, rumors began circulating that the micro-blogging service was about to buy SoundCloud. But that deal ultimately fell thru. Now the two companies have come back together. But this time, Twitter isn’t going for the full buyout.
Since its launch in 2007, SoundCloud has raised over $193million in funding thru a total of five investment rounds. The money has come from nine different investors, including Twitter. Historically, it’s been difficult for audio-streaming services to reach profitability. The biggest hurdle these kinds of companies must overcome is dealing with the licensing and legal issues that arise around streaming music. SoundCloud has even had to consider giving equity to the major record labels in order to keep them happy.
While it does provide services for podcasters, SoundCloud has always been a music-first platform. It’s hard to say what SoundCloud’s financial standing could mean for podcasters who rely on the service. But if the company doesn’t at least break even soon, SoundCloud’s future doesn’t look very bright.
SoundCloud, the so-called “YouTube of audio,” isn’t really living up to that title for many users this weekend. SoundCloud’s Podcasting Community Forum has been inundated with reports of audio files and RSS feeds not working. The problem seems to be primarily affecting SoundCloud users who rely on the service for their podcasts, as opposed to music-based users. The common problem amongst most of these complaints is that media links contained within users’ RSS feeds are returning 403 Forbidden errors. Here’s an example post from SoundCloud user Hector Trujillo 12, who’s just trying to listen to a SoundCloud-hosted podcast:
I receive “Error 403” whenever I try to play or download an episode of the “Guys We F****d” podcast via my podcast app. I contacted the app developer and he informed me that it had nothing to do with the app but actually with the hosting services of the podcast’s platform which in this case is Soundcloud.
Here’s a post from user DJ FOTN who is running a podcast thru SoundCloud:
I’ve been having difficulty this morning getting iTunes Connect to Validate my feed. I’ve tried all of the suggestions and have made sure all my Artwork is set up correctly (I think), I’ve even deleted and re-uploaded the episode.
The Episode is showing up in iTunes Connect but can’t be downloaded.
When I check the feed on https://validator.w3.org/feed/ it says the feed is Validated.
Just a note, if you paste the feed into a browser and locate the mp3 link, following this link returns the error message:
Request forbidden by administrative rules.
The only clue to be found as to why this is happening comes from SoundCloud’s status blog:
April 30th, 2016 9:39 PM CET / 1:39 PM PST
“We will be doing maintenance on our site shortly that will affect RSS feeds. This feature will be disabled for all tracks until further notice. Please continue to check our Status Blog for updates.”
Considering the podcasting side of SoundCloud relies on RSS functionality, it seems likely that this maintenance is what’s causing users to get the 403 messages. No word on how long SoundCloud will be performing this maintenance. Problems like this with podcast feeds can cause them to be delisted in the iTunes Store. Hopefully, SoundCloud gets this sorted out before that starts happening to the many users who rely on the service.
SoundCloud and Spotify are two big audio platforms that have made their fair share of podcasting news over the last year. Here’s a brief roundup of what the two services have been up to lately.
Earlier this month, SoundCloud launched its new SoundCloud Go service. SoundCloud Go is aimed squarely at music fans. It’s unclear what this new service may mean for podcasters. SoundCloud Go boasts these features:
- More tracks: 125 million+
- Listen offline
- Unlock previews as full tracks
SoundCloud Go is currently offering a one-month free trial with a price of $9.99/month after that. U.S. based SoundCloud users with Pro Unlimited accounts will be able to subscribe to the service for a discount at $4.99/month.
Swedish streaming service Spotify announced it’d be adding podcasts to its platform almost one year ago. Since then, the company has kept its podcasting support in a fairly limited beta stage while it manually adds new shows to its directory. Last month, it was announced that Spotify received another $1billion worth of funding:
The money is technically “convertible debt,” which means the investors will have a chance to buy in at a discounted rate should Spotify decide to go public. Some experts say that’s going to happen in 2017—Spotify already had $600 million in the bank at the time of this new round, so even though they’re losing money (Spotify lost $180 million in 2014), this new investment will likely keep the company afloat until their IPO.
The launch of SoundCloud Go puts the two services in more direct competition. SoundCloud’s financial status has been somewhat grim for awhile. SoundCloud Go may be a good way for the company to bring in desperately needed revenue. Meanwhile, Spotify’s growth has been slow but steady. However, the company faces increasing costs due to the complex and costly nature of music licensing. If the two services don’t reach financial stability soon, it may the beginning of the end for them both.