Soundcloud: Could this be the end?

The bitter end of an era

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By Massimo Tornambe

Soundcloud, a company valued at around $700-900 million could be approaching a bitter end. Last week, Soundcloud announced it was laying off 40% of its staff (179 employees). This surprising and completely unprecedented action took those who were being fired by surprise, while also putting the remaining employees into an understandable state of panic. The questions users like me, and former employees are asking are: Why would they do this? Will my favorite music service be around much longer? The answer unknown to everybody except for Soundcloud owner Alexander Ljung and co-owner Eric Wahlforss. Ever since its launch in 2007, Soundcloud has had to battle with other music services such as Spotify, and Apple Music, among many others. The niche Soundcloud manages to hit is their abundance of unsigned artists being able to upload their work, along with mashups and remixes. However, the most likely reason behind these cost-cutting tactics is lack of revenue. However, even with all this saved money, Soundcloud only has enough funding for their fourth yearly quarter.

Soundcloud has, however, insisted that they'll be fine. CEO Alexander Ljung stated on the soundcloud blog: "The music you love on SoundCloud isn't going away, the music you shared or uploaded isn't going away, because SoundCloud is not going away. Not in 50 days, not in 80 days or anytime in the foreseeable future. Your music is safe." His confidence steadied my nerves pertaining towards the future of my favorite music streaming service, as I hope it does to all other users. The mystery of all this lies within how Soundcloud plans to cover these losses. In no way have they mentioned their plan in handling this crisis.

The origin of this issue is within the foundation of Soundcloud's ideals. Free music, and easy posting for unknown artists. However, up until recently, Soundcloud was totally free. In order to catch up with other streaming companies, Soundcloud now offers a pro membership for $7 a month and a pro unlimited membership for $15 a month. While users can still listen to tracks for free, many popular songs are restricted (pro and pro unlimited memberships required). Either way, Soundcloud now has a steady income.

Optimistic Underground

Even though it seems that Soundcloud is struggling, they have plenty of opportunities to raise more capital. Worst case scenario for them, Soundcloud is sold for its value of around $700 million. The buyers? Deals have been discussed with Twitter and Spotify, but they both fell through. The most recent contender is Deezer, a similar streaming service.

Rumors have arose about Soundcloud being saved by the musician, Chance the Rapper. Chance posted about having a very lucrative call with Soundcloud owner, Alexander Ljung. Perhaps Chance decided to invest in Soundcloud in order to save the service. This theory makes sense considering that Soundcloud was the platform Chance was discovered on. Rumors aside, Soundcloud has made it loud and clear that they are here to stay. I, and many other listeners hope they're true to their word on this one.

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