SoundCloud logo

SoundCloud: 2007-2017? Right now it kinda seems that way. The music streaming platform, which has become a mecca for independent musicians, is currently in dire straits. The company has posted consistent losses since 2012, has been left at the altar in numerous acquisition talks, and recently closed two offices, after laying off 40% of its staff.

So, how did SoundCloud find itself in such a troubled position? There are a myriad of factors that have led to this point, but most agree that the platform started to find itself in trouble when it tried to pivot away from its original purpose. Before the time of infinite cloud storage, hosting music online was not easy for small artists. SoundCloud filled this need and democratized music hosting for years to come.

SoundCloud CEO Alexander Ljung
Alex Ljung of SoundCloud addressing crowd at Aspen Institute Campus.
Photograph by Stuart Isett/Fortune Brainstorm TECH

The platform became the go-to place for independent music online. The community flourished and entire genres developed thanks in part to dedicated SoundCloud users. As the platform gained critical mass, executives experimented with a variety of monetization approaches. The company tinkered with content-centric ads and premium creator accounts, but every new feature was marred by sloppy implementation.

In 2012, SoundCloud implemented a repost feature which became a sticking point for users across the platform. With reposts, it became quite easy for artists and promoters to artificially inflate the number of streams and likes tracks would receive. It took the company years to address the issue, and for many artists it was already too late.

In addition to self-inflicted wounds, SoundCloud found itself facing increased competition from larger streaming companies. Spotify, Google, and Apple all grabbed increasingly large portions of the streaming business. In response, SoundCloud began to offer similar products in which users paid for subscriptions. However, much of the content hosted on the platform—remixes, covers, etc.—is legally questionable when it comes to copyright usage.

In order to flesh out its paid subscription business, SoundCloud had to ink deals with major record labels. However, these deals proved to be a catch-22. Once the labels were on board, they wanted the platform to police the content that made it popular in the first place. Users that were once the lifeblood of the site became alienated.

In trying to be all things to all stakeholders, SoundCloud became nothing. Somewhere in the process of trying to pivot from a DIY user generated platform to a more legitimate retail business, the end goal became lost. Currently, the platform is still floundering in this middle ground between what it once was and what it’s trying to become.

Following the recent layoffs, many have been wondering if SoundCloud will even survive the rest of 2017. In response to the rumors of an imminent demise, SoundCloud has insisted the company will be fine. Maybe somewhat tellingly, these claims do not come with any backing financial information. Some worried users do not buy these assertions. One Redditor went as far as downloading the entire SoundCloud music catalog (a mere 900 TB) because, ya know, just in case.

Earlier this month, Chance The Rapper—who has a vested interest in the platform due to the role it played in his rise to stardom—spoke with the company’s CEO. After the call, Chance felt confident that the platform is here to stay. Many other artists have taken similar interest in pitching to save their beloved platform. They have promised to create new content that will be SoundCloud exclusive. While these efforts must be applauded, they ultimately fail to address the real problem: the platform’s poor business model.

If the outpouring of support for SoundCloud, among artists and users alike tells us anything, it’s that there is still a need for such a platform. However, we do live in a period where social and technological trends move quickly. No platforms are safe if they do not properly evolve. It’s overly idealistic to think that SoundCloud will survive solely because people want it to.

So, if it came down to it, what would a post-SoundCloud future look like? Well, it’s important to remember that necessity is one of the greatest drivers of innovation. I find it hard to believe that the needs of independent musicians would be scattered to the wind were SoundCloud to disappear. Could Spotify one day have an entire catalogue of user-uploaded music in addition to its other offerings? Check back in circa six months from now and we’ll likely have a clearer idea of where SoundCloud is headed.

Do you think SoundCloud still serves a unique purpose to the music world? Chat with us on Twitter!


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