SoundCloud gave music fans quite a scare last month when it laid off nearly half of its staff – people thought the indie music platform was going to go belly up in a matter of weeks. Luckily, it got a new lease of life last week when it scored a $170 million investment that should help keep the lights on for a good while.
The deal also mandated that CEO Alexander Ljung would be replaced by Vimeo exec Kerry Trainor; Ljung will stay on as chairman of the board, and Trainor will be joined by Vimeo’s Michael Weissman in the COO position.
Hopefully, that’ll make for some healthy changes in the way SoundCloud operates. But beyond just reshuffling upper management, there are a few things the company can do to stay alive, now that it’s starting a new chapter with a leaner team.
Fine-tune subscriptions and licensing
One of SoundCloud’s biggest problems is that SoundCloud isn’t making much money (TechCrunch estimated that its 2016 revenues would only amount to about $57 million).
It’s also spending a fair bit on licensing deals with major record labels and distributors, partly to avoid legal troubles concerning their tunes being used by creators in remixes and partly because it wants to offer mainstream music as part of its SoundCloud Go premium subscription plan.
The fact is that people know and love SoundCloud as a destination for indie tunes; if you want mainstream music, practically every other major service out there is better at this. SoundCloud should consider killing off those deals, spending a bit of money to lay those legal hassles to rest, and focus on marketing its platform to unsigned creators and smaller labels who need the platform to reach listeners.
If it goes down that road, the company would do well to reduce its subscription options for listeners. At present, there’s a free plan and two paid plans, the more expensive of which costs $10 per month – as much as what you’d pay for Spotify – and includes ‘millions of premium tracks’. Offering a single cheap option to simply enjoy SoundCloud’s indie catalog without ads would make more sense than attempting to compete with streaming services that have plenty of money to burn.
Focus on helping creators
SoundCloud is a great choice for people who want to get their music out there in a matter of minutes, and creators also get access to analytics, and an option to sell their tracks. It even supports podcasters equally well. But there’s more that the company can do to keep these folks coming back.
As analyst Thomas Euler wrote in July, SoundCloud should consider allowing artists to sell albums and merchandise, just like how Bandcamp does; it could also introduce a system to let fans donate one-off amounts or do so regularly à la Patreon.
Help artists license their music
SoundCloud is in a position to tap the massive pool of talent on its platform and help other content creators (like filmmakers and brands engaged in digital marketing) to discover music they can use in their projects; they can also assist in arranging deals between these parties and take a cut. In addition to opening up a new channel of revenue, it solves another monetization problem for artists who are just getting started with their careers.
It’ll be interesting to see how SoundCloud chooses to advance in sustaining its service under new leadership; hopefully, those decisions will be in line with CEO Kerry Trainor’s statement about keeping the interests of creators in mind – and serve to make the company some money in the process.