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SoundCloud is super popular, losing tons of money

Posted by on October 14, 2014

If you read this site, or, y’know, any site on the internet that covers music, you’re undoubtedly familar with SoundCloud. That familiar orange logo guarantees a seemless and easy way to listen to streaming music. And it’s growing rapidly, too. The service has roughly 250 million users, and is valued at $700 million. That doesn’t mean it’s making money, however. In fact, the company made $14.1 million in 2013, according to their annual filing. Pretty solid, right? Well, not exactly. It’s operating loss for the year was $29.2 million. That means that they lost more than double what they made last year. From TechCrunch:

“We are in a phase of growing SoundCloud into the market-leading platform for listening to, creating and sharing sound,” the company notes in the filing. “This has necessitated investment in technology, headcount and marketing. Our overhead base has increased faster than our revenues.”

While it’s not particularly good that they’re losing that much money, the investments they’ve made should help close the gap. They also need to negotiate with the major labels, as much of the music uploaded to the site is already licensed music. So much like they have with Spotify, Pandora and iTunes Radio, the major labels will be meeting with SoundCloud to figure out the  best way to obtain licensing agreements and pay for the content currently copy-protected so they can make money from them. However, according to the Financial Times, negotiations have stalled, with Universal, Sony and Warner Bros. all holding out for better terms. You’ll definitely be seeing advertising when using SoundCloud, as they’ve launched an ad platform. They’ll also be teaming up with brands, with Comedy Central, Red Bull and Jaguar among the brands they’ve pacted with so far.

[TechCrunch, via Thump]

 

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Categorised in: Streaming Music