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SoundCloud To Run Out Of Money Soon

The continuing saga of SoundCloud gets uglier and uglier. After laying off 40% of its work staff and closing offices in San Francisco and London (as well as laying off many in New York as well) last week, it announced to its remaining staff that the company only has enough money to carry it to Q4 of this year, meaning September.

While the company is desperately looking for a bailout investment, it still wants to remain a independent entity, so it’s resisting being sold to a larger company. Of course, that doesn’t please the existing investors too much, but the fact of the matter is that it’s the investors that got the company into its deep hole in the first place.

When the company started it was the ‘YouTube of audio” and a home for indie artists everywhere to host their songs. It was successful on that count as it catered to an audience that needed exactly that function at that time. The problem is that indie artists don’t have a lot of money, and it was difficult for the company to monetize its 175 million users. That’s where the investors came it.

The investors got the company to pivot away from being a repository of indie material to a consumer-oriented on-demand streaming service like Spotify or Deezer. As a result it launched two paid tiers – a $4.99 per month tier with advertising, and one at $9.99 that was ad-free. The problem is that there wasn’t anything to differentiate SoundCloud from other consumer streaming services that were already established and had much deeper pockets for marketing. In the meantime, its core audience of musicians and artists felt abandoned.

Many say that the 175 million users the service once had has slipped quite a bit, with some suggesting its now down to around 75 million. It’s hard to know for sure since the company hasn’t published its user numbers for several years. Even if SoundCloud manages to pivot back again to its indie artist base, it may not have the wherewithal to stay in business until the end of the year anyway.

It would be a real shame if SoundCloud went away, since it serves a real and useful purpose to the indie artist community, but that’s the streaming world we live in today for you. For more details, read this great article.

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