Quantcast
WILL SOUNDCLOUD MAKE IT RAIN—OR EVAPORATE?

SoundCloud has been a force behind the launch of a whole generation of new musical movements rooted in both electronica and hip-hop. But even as new music has thrived under its umbrella, the service itself—gaining virtually no traction with its paid tiers—is struggling to stay afloat, prompting dismay from its supporters in the biz.

SoundCloud CEO Alexander Ljung’s leadership has drawn fire following big staff reductions and a cash drought, fueling speculation about an imminent shutdown. (Rumors of new funding notwithstanding; see postscript.) “SoundCloud is not going away,” he wrote on the company blog, attempting to counter such fears. “Not in 50 days, not in 80 days or anytime in the foreseeable future.”

Can the industry help find a way to preserve SoundCloud on a financially sustainable basis? Perhaps, but what biz folk seem to find most useful has little 
to do with the company’s apparent business model.

“One thing I love about SoundCloud is that they give unknown artists a real platform to be heard,” says Top Dawg, CEO of Top Dawg Entertainment (Kendrick Lamar, SZA, ScHoolboy Q). “That’s the most devastating thing, to me, about them [possibly] closing down. Everybody rushes to SoundCloud to check out new shit. If it’s gone, where do these kids go? I was asking the team the other day—where do you go?”

“SoundCloud has been great for us with artist development,” volunteers Maverick partner and Young Money COO Cortez Bryant. “Since its inception, it’s been a key tool for gauging fans’ interest in our clients and rewarding them with free music. I personally frequent the New & Hot and Top 50 playlists. I hate that SoundCloud as we knew it is going away, because it was such a great platform for artists to share their music with no strings attached.”

Interscope Geffen A&M EVP Joie Manda recalls the bragging rights associated with finding under-the-radar gems. “You could see how early you were to the party by looking at the play counts,” he points out. “Then you shared what you loved with a repost. Then you bragged to your friends later that you found a superstar when their song ‘only had 2,000 plays and now it has 12 million!’”

How can a platform that has a measurable audience translate that into a business without annihilating its core value? This is a conundrum many DSPs face, and there seems to be a disconnect between such services and rights holders over the promotional value of finding and marketing to a tastemaker audience, rather than charging them per play—particularly when we’re dealing with a culture swirling around the newest, most cutting-edge sounds.

“Thank you SoundCloud for giving me an outlet to become creative,” tweeted Right Hand Music/RCA breakout Khalid. “Who knows where I’d be without you?”

Indie superstar Chance the Rapper, meanwhile, has been an outspoken booster, tweeting that he was “working on the SoundCloud thing” and then driving traffic by dropping a new single with Young Thug, “Big B’s,” exclusively on the service.

On one hand, not attaching proper value to an active music audience was the biz’s last tragic miscalculation, when, fearing loss of control over evolving music technology in the late ’90s, it denied the 65m-strong Napster audience that said it would gladly pay for full access to the then-illegal service. However, the biz has also seen digital services cultivate big audiences on music’s back without adequately paying for the privilege.

“Soundcloud is an extremely important platform and its absence would create a void in early-stage online discovery,” offers Alamo Records chief Todd Moscowitz. “Instead of playlisting, SoundCloud is deliberately a winding rabbit-hole of discovery, but one that is extremely viewable and shareable and less homogenized.”

Mosco adds that SoundCloud’s charts boast current and future stars, particularly in the hip-hop and electronic realms. “While these artists often graduate to larger platforms and migrate their audiences there,” he insists, “SoundCloud is quite often their entry point and the place that they find their first fans and it’s possible that it has a positive symbiotic relationship both with the larger DSPs and with hip-hop and electronic music in general. Its disappearance would create an immediate and noticeable vacuum in the artist-development space.”

If SoundCloud can find a way to monetize its artist-friendly environment, it will occupy a privileged place on the streaming landscape. But that’s a tall order in a space where even Spotify struggles for profitability. Stay tuned.

Postscript: Recent news stories reporting that SoundCloud may get some relief from VC investors offer a modicum of encouragement to those rooting for the company’s survival, but the service’s fundamental problem—its chronic inability to devise a strategy to monetize its business—won’t be solved by an infusion of cash alone.

I.B. BAD: RISE OF THE
NEXT-GEN BALLERS
A hot list of buzzing execs and entrepreneurs (8/17a)
TOP 20: KESHA
AND CARRY
Just how big is Rainbow's pot of gold? (8/17a)
GREER HEADING TO DEF JAM AS EVP MARKETING & COMMERCE
The times (and labels) they are a changin'... (8/17a)
RATING THE BRITS
Ferdy on fire. (8/17a)
GREER HEADING TO DEF JAM AS EVP MARKETING & COMMERCE
The times (and labels) they are a changin'... (8/17a)
HITS' 31ST ANNIVERSARY ISSUE
It seemed like a good idea at the time.
WHAT'S FOR LUNCH
What we're eating. How long it took to arrive. How cranky we got.
A MASSIVE MIXTAPE?
Two giants of the form are rumored to be collaborating.
THE RETURN OF ROCK
Turns out it was just napping.
 Email

 First Name

 Last Name

 Company

 Country
CAPTCHA code
Captcha: (type the characters above)