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SoundCloud’s Phoenix Rises

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It wasn’t that long ago that, along with many others, this blog was contemplating the possibility of SoundCloud’s demise. Yesterday it was announced, via an annual report, that SoundCloud just achieved its first profitable quarter. I’ve always rooted for SoundCloud, so I’m happy for the previously troubled company. 

We can guess at multiple factors for this success. Kerry Trainor’s guidance as CEO looks valuable. As he was previously in charge of Vimeo, many hoped he would bring SoundCloud’s focus back to creators after its short attempt to rival other streaming platforms. SoundCloud’s strength and distinction is its creator community. The shift back to those roots under Trainor (helped by the phenomenon of SoundCloud Rap) put the company back on a lot of radars.

SoundCloud’s integrations and partnerships added value to the service, creating more income opportunities and Pro-level subscribers. Distribution via Repost to the likes of Spotify, AI mastering through Landr, and integrations with multiple DJ software partners (including Pioneer, Serato, and Native Instruments) — among other features — offer an attractive proposition for artists. Platforms like Spotify and Apple Music are wary of such integrations, presumably to keep us within their walled gardens. But users love to tie together the multiple apps and services they use, especially when sharing and promoting music. SoundCloud is smart to welcome these third-party collaborators.

In Music Business Weekly, SoundCloud boasts of 250 million tracks on the platform, versus the 70 million-ish songs on Spotify. Of course, these aren’t all polished songs — this number counts all the demos, goof-offs, DJ mixes, spoken content, and sound collages found on SoundCloud. But this brings out another factor for SoundCloud’s renewed success — the pandemic. In the report, SoundCloud says COVID-times have presented “a true mix of tailwinds and headwinds” (perhaps the understatement of the year). It seems advertising income is the central area of uncertainty. In the ‘tailwind’ category, artists and budding artists in lockdown are adding more music than ever to SoundCloud. Subscriptions are on the rise, as are paying users of the Repost distribution service (estimated to number at 80,000 artists this month). 

Time will tell if this profitable quarter is a fluke for SoundCloud. Spotify only recently achieved occasionally profitable quarters, but its finances still hang in the balance. However, I blanch at writing about profits and earnings reports in this blog, especially as a success measure. What’s important to me is the persistence of this vital tool for sound-creators and their communities. SoundCloud remains a piece of the music ecosystem puzzle and a necessary stomping ground for new and emerging artists worldwide.

🔗→ Soundcloud’s Revenues Jumped 37% to $166m in 2019 – and It’s Just Posted Its First Ever Profitable Quarter

SoundCloud’s Distribution: Not Taking a Cut?

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Kori Hale in Forbes:

SoundCloud’s new Premiere distribution channel should streamline the money artists receive from various platforms, and help monetize their music through a revenue sharing program. By Investing in tools artists need, CultureBanx reported they can offer more value and potentially become a more profitable company, instead of trying to directly compete with Apple Music and Spotify.{…}

SoundCloud won’t take a cut of the payouts artist receive from the other music streaming services. The new distribution tool will be available to eligible SoundCloud Pro $6/month and SoundCloud Pro Unlimited $12/month subscribers.

As MusicAlly reported, SoundCloud’s distribution engine is powered by FUGA. I can’t imagine FUGA isn’t taking a cut, so my guess is that SoundCloud won’t take anything off the net received from FUGA. If SoundCloud is selling this as if artists will get the full distributor percentage from Spotify and Apple Music it’s disingenuous. Does anyone know the deal?

🔗→ SoundCloud’s Urban Culture Streams Into Spotify & Apple Music

SoundCloud’s Move Into Distribution

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SoundCloud continues to make major moves … via MacRumors:

SoundCloud today announced a new feature that allows creators to distribute their music directly to major streaming music services like Apple Music, Spotify, and Amazon Music. The tool will be included in SoundCloud Pro and Pro Unlimited subscription tiers for artists, and each artist will get 100 percent of earnings back from each streaming platform, meaning SoundCloud won’t take any cuts and won’t charge additional distribution fees.

Note that a participating artist account will have to show at least 1,000 plays a month in regions where SoundCloud subscriptions and advertising are active. A SoundCloud Pro account ($6/month) seems to allow distribution of a single release — I assume that’s per year, based on the yearly rate. The SoundCloud Pro Unlimited subscription ($12/month) gives the artist unlimited distribution.

This landscape is going to get a whole lot more interesting if the DSPs get into a sort of distribution battle. What features and analytics are coming to differentiate each of the services? I am sure these will exploit the advantages of being aligned with the native platform of the distributor — perks on SoundCloud, perks on Spotify. Dedicated distributors like Symphonic will still have a role as they offer expanded label services (playlist pitching, sync, publicity, etc.) that the streamers don’t provide (yet). An advantage for dedicated distributors is they will pitch and promote across all platforms instead of mainly focusing on one. I doubt SoundCloud’s distribution will pull much weight when it comes to Spotify placement and vice versa.

If you use Spotify or SoundCloud or — someday soon, I’m sure — Apple Music for distribution the choice will come down to which platform makes the most sense for you. Where are you strongest? Which streamer best aligns with your genre or brand? If you’re a singles artist, releasing a song every couple of weeks or so, then SoundCloud is the platform for you. SoundCloud’s design has always favored the prolific singles artist, and having these individual songs appear everywhere else is icing on the cake.

Is there a downside for SoundCloud? Part of the platform’s appeal is an egalitarian approach to user content — anyone can upload anything — and the byproduct is a lot of music found only on SoundCloud. That’s how ‘SoundCloud rap’ got its name after all — for a while, SoundCloud was the only place one could find those artists. If this distribution service makes it just as easy to upload content to its competitors, then SoundCloud could lose its tastemaking edge. Why keep anything exclusively on SoundCloud anymore?

Oh, and this is interesting, via Music Business Worldwide:

To use the toolset, these artists must also have no copyright strikes against their music on SoundCloud at the time of enrollment.

Obviously, this is meant to thwart the distribution of content not owned by the user (a big problem for these uncurated distribution portals). But it’s also a clever way to make SoundCloud’s users think twice before uploading those unauthorized remixes for distribution or otherwise. That said, it would be nice if there was a tool to show whether a DJ mix or remix would be flagged before it’s posted, or if its content safely fell under the Dubset umbrella. It would suck to get flagged for a song innocently included in a DJ mix and have the distribution option deactivated as a result.

🔗→ SoundCloud Premier
🔗→ SoundCloud’s New Tool Lets Artists Distribute Music Directly to Apple Music and Spotify
🔗→ SoundCloud is now a distributor: Platform launches tool for users to upload music to Spotify, Apple Music etc.

SoundCloud’s Rebirth

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Rolling Stone:

Per the fiscal 2017 filing, SoundCloud has taken “significant steps to improve its financial health,” including renegotiating certain rightsholder contracts, retiring outstanding debt and cutting major operating expenses, and it achieved positive operating cash flow in 2018.

While its 2018 results will not be available until later this year, SoundCloud says it has surpassed its 2018 growth plan and remains focused on two major ideas: expanding its creator business with a suite of useful artist tools and offering a unique listening experience for its “young, trendsetting, global music fans.” The latter will be increasingly tough as Spotify, Apple Music and other big streaming services solidify their place as market leaders, but the former — a focus on music creation — is something in which SoundCloud remains unsurpassed.

SoundCloud is a popular subject on this blog and, yes, there was a time when we contemplated the service’s possible demise. It’s astonishing that SoundCloud once made a go at Spotify and Apple Music, and the ensuing failure was arguably the direct result of an overreach to attract a mass audience.

I’d say ‘SoundCloud rap’ saved the platform’s bacon. This phenomenon was bubbling hard during the depths of SoundCloud’s financial woes and surely pointed the way out: by doubling down on a core user-base of creators, and looking to lead and create trends rather than passively following behind as a mainstream digital service provider. I continue to root for SoundCloud.

🔗→ SoundCloud, Making $100 Million a Year, Is Back on Solid Ground

SoundCloud Headed for the Cut-Out Bin?

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Recode:

Sources say {SoundCloud} has been trying to raise more than $100 million since last summer, without success. It has also talked to potential acquirers, including Spotify, without closing a deal.



The upshot, according to people familiar with the company: SoundCloud is now at a point where it may sell for less than the $700 million investors thought it was worth a few years ago. One source thinks it will consider bids, as long as they’re above the total investment it has raised to date — about $250 million.



SoundCloud’s struggle is taking place while there’s renewed investor interest in streaming music. Even though the industry’s economics are challenging, users have embraced streaming, and are even willing to pay for it: Spotify, which would like to go public next year, says it has more than 50 million paid subscribers worldwide. Apple Music says it has more than 20 million paid subs. {SoundCloud} says it has 175 million monthly unique users, but it hasn’t updated that number since 2014.



With Pandora experiencing similar woes, it would seem that a tech company wanting to enter the music landscape could make a big splash by acquiring both SoundCloud and Pandora at a good price and combining their users. Maybe one of these will be interested?



Update: SoundCloud forges ahead … this just in from Hypebot:

Beginning today, SoundCloud is inviting DJs and producers who create sets, remixes and other forms of creative works to join its Premier program to earn revenue for the tracks they share on SoundCloud.



Premier creators can monetize their content and earn a portion of the revenue generated by subscriptions and advertising on SoundCloud. Acceptance is still “invite only,” but you can apply here.



SoundCloud has not shared how many artists are Premier members, its criteria for acceptance, or how revenue is shared with creators.

Spotify Ditches SoundCloud Bid (Again)

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Techcrunch:

The Financial Times reported in September that {SoundCloud and Spotify} were in “advanced talks” over an acquisition — things went pretty quiet after that, but we now understand that the deal died this past week. The source told TechCrunch that the company ultimately walked away because it feared that an acquisition could negatively impact its IPO preparation.



Spotify hasn’t officially said it will go public in 2017, but there has been plenty of speculation, including a funding round with incentives tied to a listing. The source said Spotify went cold on SoundCloud because “it doesn’t need an additional licensing headache in a potential IPO year.” That’s in reference to the complexity and financial cost that comes with negotiating with music labels, something that is hugely important to SoundCloud, which has a far larger catalog of tracks than other services because it caters to creatives, indies and remixers.



Spotify is reported to have declined to acquire SoundCloud two other times over the past two years, the FT said, with a proposed price apparently the sticking point on those occasions. Beyond expanding Spotify’s ad network and userbase, a deal was seen as key to strengthening its position as well-funded competitors ramp up their music services.

Music Industry Blog wondered back in September if SoundCloud has already peaked:

Throughout the 2010’s Soundcloud’s growth was impressive, growing from 1 million registered users in May 2010 to 150 million by December 2014. But registered user numbers only ever tell part of the story. The most telling statistic is Soundcloud’s Monthly Active User (MAU) number: 175 million. Impressive enough, and 50 million more than Spotify’s 125 million. But Soundcloud hit that number in August 2014 and it hasn’t reported a bigger number since. In fact, it could well be that Soundcloud hasn’t actually issued a new number since, but instead has simply being restating that number. If it had grown, you can be sure we’d have heard about it. If it had fallen, perhaps not.

SoundCloud Partners With LANDR

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With the introduction of SoundCloud’s paid ‘Go’ service and external pressure to become a more commercial enterprise, there’s been heated speculation that the site might forgo its commitment to the independent musicians and DJs who have been SoundCloud’s emphasis. Today’s news, though a minor announcement to most, may be a signal that music creators will remain the focus of SoundCloud’s long game. Via FACT:

SoundCloud has announced a partnership with online mastering service LANDR that means all users can get free track optimization for the streaming platform. The partnership sees SoundCloud focusing once again on its original market of music creators rather than consumers after the launch of its paid subscription service, SoundCloud Go.

A LANDR spokesman said: “We use exactly the same algorithms but we did some research to find the best output for optimizing the sound of any track on the SoundCloud streaming format. The optimized tracks will only be hosted on SoundCloud and not in LANDR’s track library. It is really aimed at streaming on SoundCloud."

Professional mastering is regardless still mandatory for commercial release (seriously … please), but this is a smart move that not only gives the music uploader a little something extra out of using SoundCloud, but also improves audio consistency throughout the site.

Update, via Ars Technica:

Landr’s landing site describes the mastering process as “complicated and elusive,” then insists that its product, which is almost entirely algorithm-driven, delivers a quality product for small-fry musicians by intentionally limiting how many options they can pick from. “Great design is all about limiting the field,” Landr says. As a result, the company touts that “we’re confident you’ll hear the difference” between professional mastering work and what Landr can pull off.

After our tests of SoundCloud’s new Landr functionality, we can safely agree with that statement—in every bad way possible.

Apple Music and Dubset: Good News For SoundCloud?

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Billboard:

Apple has announced an agreement with Dubset Media Holdings that will allow Apple Music to stream remixes and DJ mixes that had previously been absent from licensed services due to copyright issues.

Dubset is a digital distributor that delivers content to digital music services. But unlike other digital distributors, Dubset will use a proprietary technology called MixBank to analyze a remix or long-form DJ mix file, identify recordings inside the file, and properly pay both record labels and music publishers.

Licensing remixes and DJ mixes, both based on original recordings, is incredibly complex. A single mix could have upward of 600 different rights holders. According to {Dubset} CEO Stephen White, a typical mix has 25 to 30 songs that require payments to 25 to 30 record labels and anywhere from two to ten publishers for each track. The licensing has been done in-house at Dubset. Thus far the company has agreements with over 14,000 labels and publishers.

*In many ways, Dubset is like any other distributor. The {streaming} service pays Dubset for the content. Dubset then figures out which label and publishers to pay. It retains a percentage of revenue for the service and pays the creator (the remixer or DJ) a share of revenue. *

Apple is just the start, says White. “The goal is to bring this to all 400 distributors worldwide. When you think about unlocking these millions of hours of content being created, it’s significant monetization for the industry.”

Much of the coverage I’ve seen, such as this article in FACT, assumes that Apple Music will use this alliance to go after SoundCloud. I have my doubts. For one thing, user-generated content isn’t really Apple’s bag (and adding this to the already muddled Apple Music interface would just create more headaches for casual users). My guess is that Dubset’s involvement is related to Beats One (and the inevitable Beats Two, Beats Three, etc) and making the station(s)’s sets ‘on demand’. Presently any radio sets that are on demand will have to consist of 100% pre-cleared music. I bet Apple would love to create more on demand content from the Beats station(s) without restricting their celebrity guest DJs. They would also be able to integrate featured guest DJ sets in Apple Music’s curated ‘For You’ section. Based on the timing of this announcement, I’m wondering if we might hear more at Apple’s event next week … there are rumors of a much-anticipated Apple Music overhaul.

As for SoundCloud, this news bodes well rather than being “ominous”. Apple doesn’t have an exclusive deal with Dubset, as the company openly aims to bring this technology to “all 400 distributors worldwide.” Having a huge corporation like Apple be one of the initial adopters will do a lot to convince others to come on board. What the technology accomplishes, once accepted throughout the industry, should do much to push ‘remix culture’ forward as it goes legit. And SoundCloud, who already dominate the niche of user-generated mixes and content, could end up coming out on top. Dubset’s tech, after all, seems to solve most of the problems that rightsholders have with SoundCloud’s service.

SoundCloud’s Life Raft Floats In Rough Waters

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Digital Music News:

SoundCloud has now finalized an incredibly important licensing deal with Universal Music Group, according to details confirmed by both sides Wednesday morning. Exact details on the tie-up are still trickling in, though SoundCloud is likely paying a handsome pound-of-flesh for UMG’s blessing. That probably includes a sizable equity share for Universal, with upfront payouts also a possibility, according to top-level details not yet confirmed.



The deal leaves Sony Music Entertainment as the lone major label not licensing Soundcloud, with Sony CEO Doug Morris demanding for more tear-downs and payouts than other big label CEOs. As UMG crosses the line, earlier sources predicted that Sony would be more likely to forge an agreement as well, though that still remains a separate negotiation.



With some punishing (and somewhat speculative) details of the arrangement outlined in this article, and the real possibility that Sony will want even further concessions, there’s little likelihood that SoundCloud will resemble its present form this time next year. The service does have the advantage of a huge active listenership as it begins this transformation, but it’s safe to say the majority of those users are interested in what makes SoundCloud different and more interactive than the other digital service providers. If new stipulations force SoundCloud to homogenize towards another free tier / subscription tier streaming service then it’s anyone’s guess how they will fare.

SoundCloud Strikes Deal with PRS

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Variety:

Music streaming service SoundCloud has struck a licensing deal with UK-based music rights group PRS for Music, settling a lawsuit and in turn clearing an important hurdle on its way to launch a full-fledged music subscription service. Now, the company just has to get other rights holders back to the table.



SoundCloud has been working for some time on launching a paid subscription service similar to Spotify or Apple Music. However, the company also wants to keep user-generated uploads, remixes and DJ sets on its platform. To this end, it has been looking to offer rights holders the ability to monetize user-generated uploads, similar to the way YouTube has been doing it in the video space.



Music Business Worldwide:

MBW: Do you get a genuine sense from SoundCloud’s side that they have a business ambition to succeed with a subscription platform – and that they’ll remain solvent long enough to do so?



Robert Ashcroft (PRS CEO): It’s clear from our discussions with them that is their intent. I know they have good financial backing. We’re very hopeful that this will be a major service. It has its own particular personality and there’s room in the market for lots of different takes on music services. We do believe that they’re sincere in the evolution of their business.



MBW: Vevo’s looking at a subscription service, Apple Music is already one; Spotify’s conceding ground on the ‘everything free’ rule; YouTube’s even launched Red – a paid-for tier. Now SoundCloud is starting to behave itself. Is there something in the air?



Robert Ashcroft: We very much hope so. We’ve been very public about our feeling that the playing field has not been level between the different kinds of services. We’ve called on the European Commission to examine the boundaries of who can benefit from the hosting defence under safe harbour legislation and who cannot. We’ve called for a clear distinction between those services that are purely passive, like DropBox, and those that are active in that they provide search, curation and various other means of accessing music. We’re in similar discussions with YouTube. My aim is to create a climate were copyright is valued on the internet, and where all of these services can compete with each other on a level playing field.