Throughout the last couple of years, SoundCloud has began attempts of monetizing their popular music platform by striking deals with record labels and music groups, including Merlin, a “Global Music Rights Agency” representing over 20,000 independent labels, Warner Music Group, and more recently with giants Universal Music Group.
A recent alarming Music Business Worldwide report, however, has shed light as to SoundCloud’s overheads and how those figures are by far out-shadowing the company’s revenue of recent years. The company’s 2014 financials paint a clear picture: While revenue reached $17.35m, the company’s losses were reported at $44.19m with employee wages increasing 42.5% to 20.3m – an average of $90,785 wage per employee. The report goes on to further specify that “in the three years from 2012-2014, SoundCloud lost almost €75m – but only brought in €37m in income.”
SoundCloud has and is taking actions to attempt to revert this trend, beginning with heavy investments and continuing with their ad platform and the plan to initiate a subscription service in 2016. In 2014 they received $60m in Series D funding from IVP and The Chernin Group before raising a further $77m the following year.
SoundCloud Ltd’s 2014 accounts include a note specifying that, “(a)fter making enquiries, the Directors have concluded that they have a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future,” before adding that, “(t)he Group’s business plan shows that further capital investment will be required in the next 12 months to fund the business until it is forecast to become cash generative at an operating level.” The report goes on to specify that considering the hard facts and figures, the company’s future is currently marred by definite material uncertainties.
The recently revealed financials naturally cast doubts as to the company’s future, a future that is currently believed to hinge on the subscription service set to roll out in the 2016 calendar year.
Source: Music Business Worldwide
