The Streaming Wars Continue, and SoundCloud Is In The Balance

Why SoundCloud’s recent financials are not encouraging

  1. The economics of streaming for non-label players.
  2. SoundCloud’s efforts to expand past its original, core user base.
  3. Its efforts to stabilize allegedly difficult financials.

Streaming 101

To understand SoundCloud’s current financial situation, we have to understand streaming economics.

Shifting Priorities

The streaming cost matter puts SoundCloud’s recent strategies into context.

Challenging Financial Realities

All that sums to the company’s current financial situation.

  • 2010 — $1.8 million.
  • 2012 — $9.6 million.
  • 2014 — $19.6 million.
  • 2010 — $2.01 million.
  • 2012 — $14.9 million.
  • 2014 — $44.2 million.

Debt and Irony

Most recently, SoundCloud raised an additional $70 million in debt funding. With this round of debt funding, it’s likely that SoundCloud is trying to follow Spotify’s example by doubling down on their growth numbers long enough to find an exit. The problem with this strategy is that SoundCloud is nowhere near as big as Spotify, perhaps lowering its M&A potential. While this strategy presents challenges for Spotify as well, the analogy ends right there, since SoundCloud’s debt is barely a pittance of Spotify’s $1 billion debt raise.

Uncertain Future

The faster that SoundCloud tries to shift to become more like Apple Music and Spotify, the more it runs the risk of highlighting it wasn’t trying to be like the standard streaming services at all.

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Adam Marx

Master Relationship Builder @Zero2OneNetwork 🚀 | @ATLTechVillage Advisor 😎 | Speaker 🎙️ | Prev. CEO @glipple + published @crunchbase, @mattermark + more ✍️