Soundcloud is a widely-known platform that has helped numerous upcoming artists. SoundCloud has given these emerging artists a place for their voice to be heard, liked and shared. This noble venture of SoundCloud has failed to make a meaningful profit despite its numerous users. This lack of profit has become a long and persistent issue for the company and left the possibility of SoundCloud heading towards permanent closure.
Financial crisis of SoundCloud
SoundCloud ranks towards the top of the most prominent free music apps for phones. It has been stated that the app has over 88 million active users.
This estimation was given by SimilarWeb, an online audience tracking firm. SoundCloud has completed its 10-year run and was well aware of its deteriorating financial condition. The Berlin-based company has implemented policies and plans to increase its revenue. SoundCloud has announced on their blog that the company is gearing up to double their revenue towards a surplus of $100 million.
Despite the understanding of their financial dilemma and the enthusiasm to address the Financial Crisis, SoundCloud has failed to bring in the required subscription base. The company, which is already in a financial turmoil, could not pay the enormous royalty fees and compete with other leading music streamers such as Spotify.
The music apps of well-financed ventures such as Apple and Amazon are also competing for a share of the listeners' pie with SoundCloud.
Influx of investment in millions
The world's leading music app has failed to rake in the profits despite its goodwill. The accumulation of the years of negligible profit has weighed down on the company, leading to its imminent closure.
Due to its financial pressure, the company has laid off 40-percent of its staff in July.
At the time of SoundCloud's possible demise, the company received a colossal amount of investment, which gave a new lease on its continued life. The media-focused investing bank Raine Group of New York and Singapore's Sovereign wealth fund Temasek, are the two companies that invested in SoundCloud.
The companies involved did not disclose the amount invested. However, a source familiar with the investment has stated that the investment is around $170 million. Along with the influx of new funds, the company has announced a change in its chief officials. It is announced that media industry experts, Kerry Trainor and Michael Weissman, the former Chief Executive and Chief Operating Officer of Vimeo, will take the same position in SoundCloud.
These major changes indicate that the investors and the top executives of SoundCloud understand the potential of the company and plan to unearth it.
