Can SoundCloud Survive?

Kodi Vonn

Remember when we said you should have a website in case anything happened to one of your social media accounts? News of SoundCloud’s layoffs—and the media explosion surrounding the CEO’s responses to bankruptcy—prove why we were right.

2017 has witnessed the music-streaming company fall from grace onto shaky ground with an unclear future.

On July 6, the Berlin-based music-streaming company laid off 173 employees and shut down offices in London and San Francisco (New York and Berlin remain). The news came as a surprise to industry professionals and SoundCloud users. But the layoffs were explained as necessary, budgetary measures “to ensure our path to long-term, independent success,” said CEO Alex Ljung.

Back in March, TechCrunch reported that SoundCloud wouldn’t be “running out of money soon” after the company secured a “$70 million round of debt funding from three new investors—Ares Capital, Kreos Capital, and Davidson Technology.”

Today, it’s a different story.

SoundCloud had fallen short of its $1 billion valuation in 2014, but an equity round eventually valued the company at $700 million. SoundCloud had raised $320 million in total.

The company provides a service unlike any of the other music-streaming platforms with more than 110 million music posts. In comparison, Spotify and Apple Music host about 30 million.

Fast forward to early July and reports of bankruptcy and a shutdown of the site haunt the company. By July 13, TechCrunch reported the company had 50 days of funding left. A revision later changed that to 80 remaining days.

SoundCloud offices in New York measured 40,000 square feet across multiple floors and cost $3 million in rent a year. The company hosted catered lunches twice a week and new employees received new Apple laptops.

Insiders at the company painted a grim picture of a future outlook. One employee called it “a shitshow” and said “I don’t believe that people will stay. The good people at SoundCloud will leave. Eric [Wahlforss] said something about the SoundCloud ‘family,’ and there were laughs. You just fired 173 people of the family, how the fuck are you going to talk about family?”

Then, unexpectedly, Chance the Rapper tweeted that he was “working on the SoundCloud thing.”

The Grammy-winning artist has definitely benefited from the platform, but few saw how he might be able to save SoundCloud from it’s financial missteps—including unchecked spending on extravagant office spaces. Variety reported July 14, after Ljung’s “SoundCloud is here to stay” statement was released, that “a rep for SoundCloud [said] the rapper is essentially spreading good vibes about the company during a challenging time and that if he is making a more material commitment to the service, she is unaware of it.”

So where does that leave SoundCloud’s reported 175 million users in 190 countries (a number doubted by some analysts who believe the number closer to 70 million)?

A few days ago, Vice posted an article that read “Back Up Your Sh*t, Because Soundcloud Might Be Dying” while Digital Music News released one titled “How to Protect Your SoundCloud Collection Before It Goes ‘Poof’”. These are sentiments echoed by much of the music industry.

While news comes out daily from SoundCloud and those watching the music-streaming company, it’s unclear what the future holds. Ljung has stated “the music you shared or uploaded isn’t going away, because SoundCloud is not going away” but has neglected to reveal what plans are in place to make that happen. He reiterated the company’s intention to remain “a strong, independent company” but with no definitive path ahead, users can’t be sure whether to hedge their bets and move on or not.

Before the dust settles on the story of SoundCloud, artists should do a few things to safeguard their work. Upload tracks to multiple platforms (like YouTube), making it available to a larger audience. Back up your music offline as well. Let your SoundCloud followers know where they can get updates about you and your music in case anything should happen (and provide links to your other social media).

For more on how to develop your career and take advantage of the tools available to indie artists, check out our courses on Independent Artists and Branding Basics.