MUMBAI: SoundCloud, one of the most popular music streaming websites, may have managed to secure more than 22 million listeners, but its rapid growth has seen the company’s costs run away from its revenues.
A recent report showed that for 2013, the music streaming service posted a turnover of €11.2 million in 2013, up 40 per cent from the previous year’s revenues of €8 million. However, the company’s operating loss during the period, more than doubled from €12.4 million in 2012 to €23.1 million in 2013.
In the report, it was noted that at the end of 2013, SoundCloud had €46 million in cash, before €9.4 million was deducted in 2014. Swedish publication Dagens Industri pointed out that should SoundCloud continue growing at its present rate or faster, the service would need to generate more funding very soon.
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The report hints that as a means to monetise itself, the company taking to advertising, premium services and deals with labels. Earlier in August, SoundCloud improved its strategy for paid, premium subscription by launching an ad platform.
Although being fairly successful in its attempt at tying up with record labels, Financial Times recently reported that SoundCloud’s negotiations with major record labels like Universal, Sony and Warner have suspended, and are said to be waiting for better terms from SoundCloud. The report refrained from going into details regarding the unsatisfying terms that were offered to the labels.
One constant cause of concern for SoundCloud has been its lack of licensing agreements with music labels which allows it to stream copyright material. While professional musicians including Nine Inch Nails and Beyoncé have debuted exclusive content on the service, most of the content is from amateur musicians.
TechCrunch is calling SoundCloud’s deals with labels “complex” as it stated that the deals are about more than just about advertising alongside content that is hosted and consumed on SoundCloud. Another looming issue with SoundCloud has been about paying out royalties for licensed music that is mostly heard on the service.
