Everyone knew that SoundCloud was deep in financial trouble and that trouble would come to a head sometime this year. It looks like that time is finally here as the company closed both its San Francisco and London offices yesterday. While 173 people lost their jobs as a result, it’s the people that depend on the company to display their wares that are frightened of what might happen in the future.
For many indie musicians, SoundCloud is their outlet for getting their music online and they would be hard hit should the company cease operations. Although that’s a possibility, there appears to be a lifeline available in a rumored acquisition by streaming service Deezer. That company is owned by mogul Len Blavatnik’s Access Industries (which also owns Warner Music Group).
What most likely will happen is that Deezer or some other financial entity will wait until the just before SoundCloud turns out the lights and then sweep in to make a deal at the lowest price possible.
While that might save the accounts of millions of indie artists, there’s still an uncertainty of what might happen if another entity takes over. SoundCloud is available in 190 countries, and unsigned artists have come to rely on it as a means for easily hosting their songs and albums. The problem is that not enough pay for the privilege, and not enough consumers are willing to pay to access it either.
That being said, there are investors that still believe in the company. It was only last March that SoundCloud secured a flexible $70 million credit line from Ares Capital, Kreos Capital and Davidson Technology. This was thought to help finance its $4.99 tier, which allows users ad-free offline play.
The problem is that there are so many other streaming music choices for consumers, and the ones that are willing to pay want to hear the hits. With Spotify and Apple Music clearly in the lead, and Google and Amazon coming on strong, it’s difficult for a company to break into that strata without a huge marketing budget, and that’s something SoundCloud simply doesn’t have.
The hope here is that SoundCloud will be saved sooner rather than later, and that the artists, songwriters, producers and musicians that depend on it will continue to have an inexpensive outlet to display their music.