For years, music streaming site Soundcloud has operated as the de facto home for independent musicians looking to get their names on the map. From aspiring DJs to soulful crooners to … uh … whatever Post Malone qualifies as, lots of big names have used Soundcloud as a trampoline to stardom.
That’s why it’s been so hard to see the service struggling as of late, as a series of financial filings revealed last February. It turns out that, without a massive parent company like Google, it’s quite difficult for streaming services to turn a profit — especially when your CEO is too busy partying to pay attention. That’s why Soundcloud asked for — and today received — $170 million in rescue funding from its investors.
The money comes from global merchant bank The Raine Group and Singapore-based investment company Temasek. As part of the deal, oft-maligned CEO Alex Ljung will be removed as CEO and replaced with former Vimeo CEO Kerry Trainor. Co-founder Eric Wahlforss will similarly step down as chief operating officer, to be succeeded by Michael Weissman, also formerly of Vimeo. Ljung and Wahlforss will stay on with Soundcloud as chairman of the board and chief product officer, respectively.
Previous to the funding round, Soundcloud’s enterprise valuation was just $150 million. Previous funding rounds saw the service valued at $700 million, a stark reminder of just how far the popular platform has fallen. Delayed negotiations with major record labels prevented Soundcloud’s $10/month Go+ subscription service from ever posing a true threat to competitors like Spotify and Apple Music, while generally irresponsible spending habits — their HQ in Berlin offered regular catered meals, plus lavish gifts for new employees — all but doomed the service from the get-go.
Earlier this year, Soundcloud underwent a huge series of budget cuts, laying off nearly half its employees — some of whom had been hired less than a month prior. If the service does go under, that will mean the disappearance of more than 100 million tracks. Many of those are hosted elsewhere, of course, but many aren’t, as lots of artists use Soundcloud as their primary outlet for releasing and promoting material. There’s still Bandcamp (and a few sites like it), but those platforms simply don’t have the same social potential.
Soundcloud currently offers independent artists an opportunity to host their tunes without paying fees or waiting for uploads to process. The platform has become an integral part of the internet-era music industry, and while a suitable replacement will no doubt pop up eventually, its demise would strike a major blow to many up-and-comers. Even though Soundcloud is living to fight another day, there’s no guarantee that the platform is safe forever.
Update: Soundcloud is safe! For now, anyway.
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