SoundCloud recently announced in a blog post that it has secured enough funding to stay up and running for the foreseeable future. The music streaming service has struggled to monetise its services, despite its massive user base.
“I’m happy to announce that together with investors the Raine Group and Temasek, we’ve just wrapped up the largest financing round in the history of SoundCloud. This financing means SoundCloud remains strong and independent,” said founder Alex Ljung in the post.
The exact figure raised was not specified, but SoundCloud has attracted significant financial backing in recent years. In June 2016, Twitter invested around $70m in the company, and in March SoundCloud raised $70m from Ares Capital, Kreos Capital and Davidson Technology.
SoundCloud company has struggled financially as, despite attracting a reported 175 million users worldwide, most users are free subscribers
Ljung also announced that he would be stepping down as CEO as part of the financing deal, with Kerry Trainor and Mike Weissman joining the company from video sharing platform Vimeo, as CEO and COO respectively. The new appointments will raise questions about SoundCloud’s intention to broaden its services to include video.
The company has struggled financially as, despite attracting a reported 175 million users worldwide, most users are free subscribers and the company has failed to generate a significant revenue stream through advertising. The Berlin-based company suffered a net loss of $631m in 2015, and has been plagued by rumours that it would run out of money by the end of this year. In July SoundCloud was forced to lay off 173 staff members and close offices in London and San Francisco, condensing operations into its Berlin and New York offices.
Speculation that the company may collapse and the platform would vanish from the internet led Ljung to release a statement in July promising the company’s future was secure. “Soundcloud is not going away. Not in 50 days, not in 80 days or anytime in the foreseeable future. Your music is safe,” he said.
The appeal of SoundCloud lies in its eclectic content, with unsigned artists uploading tracks alongside the work of established musicians. Unlike competitors Apple and Spotify, who have built large bases of paid subscribers and pay a large chunk of revenue to record labels who hold content licenses, SoundCloud has very few paid subscribers. However SoundCloud’s business model has enabled it to build a huge monthly user base, dwarfing Spotify’s, since unsigned artists use SoundCloud as a way to promote their music and build a following.