Loading Posts...

Quite possibly if today’s reports are to be believed.

At the time of writing Soundcloud hasn’t a made a single penny in 8-years. Nothing. Nilch. And while the doesn’t actually matter in many respects – eventually Soundcloud actually needs to start making some money, and fast, or it could be curtains for the much-loved service.

Soundcloud’s burn rate is so alarming in the last two years they’ve lost €37 million, and their investors are reportedly getting nervous that the company’s laser-like focus on growth instead of profit could see the service shut down.

Admittedly, most tech companies rarely turn a profit in their early years – it’s all about growth; securing millions of users and then over time begin to monetise said users. Facebook, for example, nailed this particular strategy perfectly.

And that was echoed by the company in a statement sent to Fact Mag today, “Beyond the full-year financials for 2014, which reflect those of a company in a strong growth stage, they show that, in 2015, we secured $77m of incremental capital, some of which came from our existing investors, demonstrating their belief in the future of the company, and the rest of which is a flexible credit line from Tennenbaum Capital Partners, an attractive option for companies like SoundCloud, who have a solid credit rating and are on a clear path to global success.”

Quite where this “global success” will come from is the main issue. If you asked me to choose between Spotify or Soundcloud to spend my £10 per month on, it would have to be Spotify or one of the other services from the likes of Google or Apple.

By turning Soundcloud into a paid-for service, it’s no longer competing with other free services like Youtube, Mixcloud or even Bandcamp – it’s now going up against Spotify, TIDAL, Google Play and Apple, and quite frankly it will always lose out against company’s with bigger balance sheets, who can potentially afford to bundle music with other entertainment packages for a better value proposition.

Soundcloud at the moment isn’t like any other music service – it’s totally unique – and by trying to turn it into something akin to Spotify or TIDAL, admittedly with a uniquely strong social element, it’s a difficult sell for anyone to buy into. And that’s the issue, Soundcloud in its current state just can’t survive – that’s a fact – and by monetising it with a subscription model, it suddenly becomes a small player in a incredibly competitive marketplace going up against companies who make billions and can afford to use music as a loss-leader if they so wish.

Andrew Rafter

Andrew Rafter is the editor and founder of Harder Blogger Faster.