
SoundCloud's Collapse - prostoalex
https://www.buzzfeed.com/ryanmac/inside-the-storm-at-soundcloud
======
sgentle
Never do a music industry startup unless you have a billion dollars, can raise
a billion dollars, or plan to be acquired by a company with a billion dollars
to spare. That's the table stakes for going toe-to-toe with the big three.

They'll bleed you to death with licensing fees, deputise you into their
copyright enforcement police, upload their songs to your platform on one hand
while suing you with the other, and all the while cry about how extracting
monopoly profits is so much harder than in the old days.

Just go disrupt something safer, like organised crime or the international
diamond trade. At least with those the law probably won't change out from
under you.

~~~
skrebbel
Well, Spotify managed just fine. They didn't have those billions when they
started out in Sweden.

~~~
bogomipz
Did they manage just fine? They had to cut the same extortionate deal with the
big 4 records labels and give them an equity steak in the company as well[1].
Given the recent figures I think the jury is still out on whether Spotify and
this whole "the more we make the more they take" business model is actually
sustainable:

"In 2016, Spotify lost just over $600 million ($601.4 million), up
significantly from 2015's losses of just under $258 million. This means losses
increased by 133%."[2]

[1] [http://www.swedishwire.com/jobs/680-record-labels-part-
owner...](http://www.swedishwire.com/jobs/680-record-labels-part-owner-of-
spotify)

[2]
[https://www.forbes.com/sites/hughmcintyre/2017/06/15/spotify...](https://www.forbes.com/sites/hughmcintyre/2017/06/15/spotify-
lost-more-than-600-million-from-3-3-billion-in-revenue-in-2016/#38fc54617008)

~~~
mcguire
" _...give them an equity steak..._ "

I think I love that phrase.

~~~
bogomipz
LOL. It sounds very Marie Antoinette. I'm glad you pointed this out :)

------
bogomipz
>"In November 2014, SoundCloud closed a deal with Warner Music Group, giving
the label an undisclosed cut of revenue from ads, a 3%–5% stake in the company
and protection against past copyright infringement from the label."

This sounds like terms dictated by the Mob. It's quite telling that the deal
also conferred ownership on a content holder in order to be able to license
and pay handsomely for their content. This is only one of the big 4 they were
negotiating with too. By the time they get done negotiation with the other 3
they would have likely given up 15% of the company. Note the big 4 all have
stakes in Spotify as well[1].

At any rate I think this should have been a sign that they were going down the
wrong path. Propping up these labels and hitching your wagon to them, only to
have to constantly renegotiate your deal with them every couple of years seems
contra to a platform that gave artists direct access to music fans without the
middle man.

[1] [http://www.swedishwire.com/jobs/680-record-labels-part-
owner...](http://www.swedishwire.com/jobs/680-record-labels-part-owner-of-
spotify)

~~~
cookiecaper
>This sounds like terms dictated by the Mob.

The simple fact is that copyright protections are far too strong. The
copyright cartel doesn't need a shady network of 400 pound men to enforce
their schemes; they just use the U.S. Attorney's office instead.

How many bright technical entrepreneurs have been crushed by rent-seekers
milking the royalties out of a 40-year-old track? Copyright has completely
lost the plot. We need to rein it in, with the awareness that this will be no
small task, as it amounts to taking away a license to print money from some of
the largest companies in the world.

~~~
bogomipz
>"How many bright technical entrepreneurs have been crushed by rent-seekers
milking the royalties out of a 40-year-old track?"

Anything after Jan 1st of 1978 is now capped at 35 years, so these are
becoming less and less See:

[http://www.songwriteruniverse.com/gosainkaplanrecapture123.h...](http://www.songwriteruniverse.com/gosainkaplanrecapture123.htm)

>"Copyright has completely lost the plot."

Well the copyright of the of recording is there to protect the record label's
investment. They aren't going to finance a record and it's promotion if
someone else can come along and also release the same recording and collect
money for it. That was always the plot.

That being said artists don't have to sign contracts with record labels if
they don't want. With technology and the internet it is possible today more
than at any point in history to successfully release and promote your music
without a record label. I thought this was the great promise of platforms like
Soundcloud. If an artist decides they need the marketing muscle of a record
label they can license their recordings to a record label and retain the
recording copyright. I really believe this is the future: See:

[https://www.theguardian.com/music/musicblog/2009/jan/29/reco...](https://www.theguardian.com/music/musicblog/2009/jan/29/recording-
copyright-ownership)

~~~
Dylan16807
That helps a little bit but it's not automatic and even when that's done the
music is still under maximum copyright for another century.

~~~
bogomipz
Huh? There's two copyrights - the copyright for the physical recording which
is now 35 years and there is the songwriter copyright which is country by
country but generally 50 to 70 years. The latter favor the artists so that
they can receive royalties for their lifetime. Without that the songs would
fall into the public domain while they artists was likely still alive. See:

[https://www.theguardian.com/media/2011/sep/12/musicians-
copy...](https://www.theguardian.com/media/2011/sep/12/musicians-copyright-
extension)

~~~
nitrogen
_Without that the songs would fall into the public domain while they artists
was likely still alive._

That was the case for centuries. Why is that such a bad thing?

And US copyright is definitely longer than 35 or 50 years -- try uploading an
Elvis track to YouTube; I bet someone would notice.

~~~
bogomipz
>"That was the case for centuries. Why is that such a bad thing?"

For centuries? Given that commercial recordings weren't widely available until
the end of the 18th century I am not sure where you are getting this from.

You are mixing different things - there is a songwriter copyright and the
recording copy right.

A song being in the public domain(the expire of the songwriters copyright)
doesn't mean you get to use the recording however you see fit. It means you
can use the song as in record the song yourself and not pay royalties to
Elvis's estate or whoever actually authored the song.

The terms of the recording copyright determine who owns the physical
recording. Often after a number of years these can revert back to the original
performer. This is known as a "reversion." Upon a reversion the original
performer can then license the original recording as they please - as
reissues, for inclusion on compilations etc. This is why you can't upload an
Elvis song to youtube - because Elvis Presley Enterprises own the recording.

------
k-mcgrady
SoundCloud could have been a nice business if they hadn't got greedy. From the
beginning (or close to it) there have been various paid accounts for artists
which a lot of people used. SoundCloud was the best place to discover new
music from unsigned artists. There were unsigned artists with tracks on it
that blew up and eventually got picked up by major labels.

But:

\- SoundCloud neglected the platform.

\- Then they did one of the worst redesigns of any site I've seen (try
reordering a track in your spotlight [paid feature] in Chrome. Crashes the tab
and has done for years. I need to open another browser to do that.).

\- Then it became overrun with major label artists.

\- Then they started offering features just to the big artists - various
UI/branding options - (forgetting about the artists that got them to where
they were).

\- Then they did the whole paid streaming mess which they were never going to
succeed in. Anybody could have told them that, I really don't believe anyone
in that company thought 'Go' would work. I think they just needed to do
something.

I'm not sure if they've taken so much money now that this isn't possible
anymore but if I were CEO I would take it back to it's roots. Focus on the
unsigned artists. Fix the site. Offer a distribution system (like
CDBaby/TuneCore) so that SoundCloud can be a one-stop show for unsigned
artists. Now you've got paid accounts (for stats/spotlight/unlimited upload
space) and a small cut of distribution on all paid platforms.

I don't understand how in a world where more artists are getting big without
label help nobody is offering a great platform for them. SoundCloud got very
close in the past. BandCamp has gotten close too (although it lacks the
social/sharing/viral aspect of SoundCloud). If SoundCloud does end up shutting
down it's due to greed and poor management. Instead of focusing on what they
do well and what people use them for they've tried to go after the money and
they were much too late making that move to get any of it.

~~~
jameskegel
It is funny you mention Bandcamp as your flagship example considering how much
1993 duct tape is holding it together. You cannot compare the UI and tech of
the two; Bandcamp has neglected the same Courier New interface since they were
a startup. SoundCloud engineering is worlds ahead. They were one of the
biggest proponents and pioneers of containerized microservice architecture.
They took a lot of beatings so that we wouldn't have to, and that's worth
something to me. Frankly I've never read an inspiring development article from
Bandcamp a engineering team.

~~~
jerrylives
How about this for inspiring?
[https://daily.bandcamp.com/2017/01/24/everything-is-
terrific...](https://daily.bandcamp.com/2017/01/24/everything-is-terrific-the-
bandcamp-2016-year-in-review/)

Bandcamp, with its "Courier New" interface, has delivered hundreds of millions
of dollars in value to its users and artists. And it's still growing.

That's cute that soundcloud made a bunch of blog posts about their super elite
containerized microserviced architecture. How's their business doing? Who's
making money on there besides industry plants?

~~~
thatswrong0
Something must be terribly wrong at SoundCloud engineering besides the money
crunch. They have done nothing to improve the core user experience for years.
They've only made it worse on iOS. Try scrolling down the feed a bit on Chrome
- it heats your computer up and starts gobbling CPU. None of their paid plans
get me higher quality audio, which is sorely needed because by default their
audio quality is shit. As an app or paid service, it's trash.

Yet it's the sole music app I use: all of my favorite artists and music are on
SoundCloud. The only thing it has going for it is the community.

------
iagooar
This shows us, that company valuations are ridiculous and actually mean
nothing.

Is SoundCloud worth a billion dollars? Well, it might be on paper or in the
imaginations of the founders, but what does it really mean? To me, it's worth
nothing.

The real problem is: these companies start to operate from the perspective of
"having" those millions of dollars. This is why they hire too many people for
too much money. They spent hundreds of thousands on marketing.

But in the end, you know what? They need to beg for money to pay their debts.
They need to lay off dozens of employees because they don't have the money to
pay them.

What if SoundCloud would have kept a small, yet highly skilled engineering
team of maybe ~20 people, some marketing and sales, and try to not outgrow
themselves? Probably they'd be having a huge surplus each year because their
costs would be small and sustained.

When I read stories like these, I actually feel good about my bootstrapped,
down-to-earth startup. We don't make millions, we don't "disrupt" the
industry, yet we solve our customers' problems and delight them. We won't ever
run out of money, as we carefully check each and every expenditure, and have
growing savings in the bank.

~~~
manmal
Once you have investors, they want their money to grow, and this is not
possible by staying small. We have invested in a startup we work with, and
given the high risk of failure, I would not be happy with a meager growth rate
of <10% per year. At that rate, my money is safer in the bank or some kind of
low risk portfolio. If you have an 80% chance of losing the money, then you
better expect at least a x5 return rate when selling your shares.

I'm a big fan of bootstrapping myself, and it's the best model IFF you can get
by without investors. If you, like SoundCloud, have a product that does not
break-even, then you will need investors, period. Of course you could say -
well, just don't make a product that nobody pays for; but obviously there is a
market for such products, on the investor side.

~~~
yeukhon
Staying small != don't grow business. I would never hire crazy so people in
the startup can imagine spinning up new projects new microservice new crazy
revolutionary database/big data/ new KV store/new cache layer out of
curiosity.

Till one point, when the business is so big, growing engineering team to over
100 is inevitable. But plently of really successful tech companies did not
overgrow their team size for a number of years. E.g Facebook.

Human captial spent is actually the most expensive even comparing space rental
if you add up salary, bonus, and benefits. I also will not recommend startups
in their early stage (or even until they can break-even for a long time) to
flu candidates over. There is really no reason to fly people over until you
want to hire that person. Flying and hotel adds up big time too. Google can
offer this because spending a couple millions doesn't matter to them.

~~~
elmar
_> But plently of really successful tech companies did not overgrow their team
size for a number of years. E.g Facebook._

A much better example is WhatsUp with 55 employees at the time of aquisition.

~~~
GarethX
Or Instagram - they had 13 employees when they were acquired.

~~~
elmar
Yes, but you could argue that WhatsUp is even more impressive because it can
be considered much latter stage and aquisition value also reflects that being
19x more than Instagram.

------
kowdermeister
"Jeff Toig's preferred PowerPoint style is size 10 Arial font with a black
background. An earlier version of this story misstated the color."

This is the funniest correction I've ever read :)

~~~
keithpeter
Yes, I thought that was amusing, the idea that Mr Toig's main complaint about
his portrayal in the article was the mis-statement of his preferences for
presentations gives you some idea of what it must have been like in the
section of the business that he was responsible for (we don't know who
provided the correction of course).

A previous manager of mine insisted on all documents using 12pt Arial with
18pt line spacing...

~~~
netheril96
Maybe Mr Toig complained about many things, but the writers chose to only
accept this correction.

~~~
keithpeter
I accept the point.

------
xfer
> According to one former SoundCloud Berlin employee, a lack of direction from
> Wahlforss, who served as chief technology officer, made things worse, with
> some engineers going rogue and rebuilding their colleagues’ work in their
> preferred programming language.

Does this happen at other startups?

~~~
Mikushi
Happens everywhere.

In corp I've seen engineers go behind their manager's back to write something
in their favourite language knowing it would've been rejected if discussion
had happen beforehand.

~~~
pjmlp
And then they go and write a blog entry about how much productive they are
now, instead of what was the actual business impact if any, to the company
customers or revenue.

~~~
Dylan16807
I don't follow. If they are coding the right things, then a real increase in
productivity means better business impact. If they are coding the wrong
things, then language doesn't matter.

How can a programming language choice hurt the business through some mechanism
other than productivity? You could say that such a behavior is "indicative of
poor choices" but that's begging the question.

~~~
pjmlp
No it doesn't mean a business impact at all, unless it is proven by
accounting.

Programmer hourly rate * amount spent on doing such tasks = project money
spent

Now how has the _project money spent_ impacted the overall project costs,
compared with the solution that everyone else is using, including the training
costs for the rest of team, setting up a new build infrastructure, possible
extra tooling support, salary rates for new hires?

Somehow I feel many coders would profit to learn a bit more about business and
project management.

~~~
Dylan16807
> No it doesn't mean a business impact at all, unless it is proven by
> accounting.

You're not understanding me. I'm saying that _if_ the work would have this
good business impact with the original language, then doing the same thing
with better productivity (with the same worker) is better.

I'm not saying that improved productivity is guaranteed to mean business
impact. Just that it either makes a good thing better, or it takes a bad thing
and doesn't make it worse. If someone is doing the wrong work, their rate of
production is not to blame.

> Now how has the project money spent impacted the overall project costs,
> compared with the solution that everyone else is using, including the
> training costs for the rest of team, setting up a new build infrastructure,
> possible extra tooling support, salary rates for new hires?

Other than 'salary rate', all of that falls under _productivity_. If all those
costs are going up enough to drop productivity, then the entire premise goes
out the window! The premise was secretly using a different language to
increase productivity. Secretly using a different language to _decrease_
productivity is so obviously a bad idea that it's not worth discussing.

------
thinbeige
I read this article few hours earlier when crawling through the new section.
It's a surprisingly interesting piece from Buzzfeed but there's a lot of
bashing of the CEO, the CTO and one recently hired senior for label relations
(who seem to be really odd).

This is typical: SoundCloud was an iconic company, its founders worshiped and
idealized. Once money runs out, people _but especially_ former employees start
to backstab, blaspheme and blame loud and clearly. Why not before? Now when
everybody is hitting SoundCloud it's easy and risk-free to join the hate. All
the NDAs they once signed seem to be gone? To be fired also means fire and
forget for them.

I never believed in SoundCloud. The founders did a great job building a huge
brand and DNA out of nothing but the business model is by design broken or to
put it simply, you just can't do business with music labels.

Btw, where is Fred Wilson? The biggest proponent and investor of SoundCloud
who didn't miss an opportunity to tell us that sound is the future stays
silent and hasn't commented this tragedy once. A VC just for good times?

EDIT: Why the downvotes? Mind to share your view?

~~~
snom380
I didn't downvote, but:

\- Presumably the people inside the company has tried for years to pressure
for a change. When that doesn't work, and especially once a big layoff
happens, it's understandable that employees vent their frustration in public.
And that might be what it takes for outside people (investors etc) to make
necessary changes at the top. It's not about backstabbing.

If these employees didn't care at all about the fate of the company, they
would just take the severance package and move to other jobs without saying
much. The complaining you hear is most likely from people that _care_ about
SoundCloud.

\- You're saying that the business model is broken, because you "can't do
business with music labels". YouTube is evidence that it _is_ possible, it's
just tremendously difficult.

You need advanced algorithms to detect copyright ownership, you need a system
to do revenue sharing, you need people to handle complain cases etc etc.

The reason why they failed has to do with poor strategy and execution, and
less to do with the business model.

(This reminds be of all the people that said Apple could never get into the
cell phone business because dealing with the operators would be impossible. Or
that web search was a broken business model back then Yahoo-like portals were
all the rage and web search truly sucked.)

~~~
thinbeige
> it's understandable that employees vent their frustration in public

They still break an agreement.

> YouTube is evidence that it _is_ possible,

Music isn't their core. And btw the agreement between Youtube and the German
GEMA took a decade.

~~~
snom380
Does the fact that it's not their core contradict what I'm saying? Youtube is
still hugely popular for people to share their own recordings and remixes.

I know that it took a long time for YouTube to figure out the licensing stuff.
As I said, tremendously difficult, yes, but not impossible.

~~~
thinbeige
> Does the fact that it's not their core contradict what I'm saying?

Yes it does. Youtube is not about music, their focus lies somewhere else,
music complements their product but they are not dependent on it and besides,
it's a just one rev stream compared to their main rev channels. Another
example: Apple has Apple Music to strengthen the network effect of their
products, not because they want to enter the music business. So, both used
labels to complement their core products. Both would survive without deals to
the labels. SoundCloud would not survive without those deals because then
SoundCloud wouldn't have any product.

> As I said, tremendously difficult, yes, but not impossible.

I disagree, 10 years negotiations sounds like something impossible for a
company which core solely relies on music, who wants to fund a company for 10
years with an unclear outcome?? For Youtube it was a different story: In this
ten years Youtube severely damaged GEMA's reputation by displaying billion
times that it's GEMA's fault that user can't listen to music. So, it's
questionable if any other company with less power would have been able to
strike a deal with the GEMA. Anyways, Youtube could have negotiated 100 years,
they still would make revs through other channels.

~~~
snom380
Youtube is about user uploaded content, and without a content recognition
system in place for video and audio and licensing in place with both the movie
and music industry they would have been dead in the water, just like
SoundCloud. What other revenue streams would they have that would have worked
without that?

As the article mentions, SoundCloud eventually did reach an agreement with the
music companies, showing that it didn't have to take 10 years, but took longer
still than they expected.

So my theory is that the business model is not broken by design as you claim,
but that SoundCloud got into the trouble it is now in by poor strategy and
decision making.

~~~
rhizome
_So my theory is that the business model is not broken by design as you claim_

If the solution is that they just charge $80/mo, then "well duh," but there
are other, non-licensing, forces involved at that point. The labels would love
their slice of that model, but good luck selling it.

------
whofailed
Contrarian here:

Soundcloud is an incredibly valuable property. They have obviously had a few
managerial cock-ups, but in reality they have massive user buyin, huge network
effect, and anyone who can get some equity in them during this current time of
massive negative sentiment is going to do VERY WELL. I wish I had a way to buy
in at this point.

~~~
tjr225
SoundCloud is still the only place, as far as I know of, where underground and
loft electronic music is shared and recognized. It's a pretty big scene and I
genuinely don't understand all of the huge negative words surrounding
SoundCloud right now, but I guess as someone who uses it every day I don't
really pay attention to their business decisions.

~~~
keypusher
MixCloud seems to be doing pretty well on the electronic music front. I don't
know exactly what qualifies as underground anymore, but there are tons of
great electronic mixes on there and a pretty active community.

------
bogomipz
Not showing up to company retreats, circulating pictures of yourself taking
private jets and hanging out with celebrities in Ibiza, doing a Ferragamo ad -
CEO Alexander Ljung sounds like Erlich Bachman.

It's easy to write those things off as petty gripes but I think they are
important in that illustrate a CEO who doesn't understand that those are bad
"optics" for employees who are seeing layoffs and lack of funds available to
higher talent. And a CEO who doesn't understand the nuances of this might also
not see the nuances of lots of other important areas of their business. Why
does the board not remove him?

~~~
jameskegel
We aren't doing "optics" anymore; that was more of a mid-election phenomenon.
CEOs are largely just figureheads these days- one could argue that in this
music industry it is important to have somewhat of a splashy rockstar image to
exude legitimacy.

~~~
bogomipz
Except that this usage of the word "optics" in popular lexicon predates the
U.S. election by at least 4 years. See this "word detective" entry from 2012:

[http://www.word-detective.com/2012/01/optics/](http://www.word-
detective.com/2012/01/optics/)

~~~
jameskegel
It does not seem prudent to debate 2017 popular social vernacular with a
publication from 2012. (Although your article goes on to support my argument
of Optics being a term reserved for political discussion) Optics is a term
largely reserved for the stage of political theatre, that is not my assertion,
that is the zeitgeist of popular opinion.

~~~
bogomipz
Firstly I am not debating anything, your assertion is that this usage is a
phenomenon bounded by the US election season and I pointed you to a resource
demonstrating that it has been increasing in usage for at least the last 4
years. It is not "passé" now simply because the U.S. election is over.

>"Optics is a term largely reserved for the stage of political theatre"

Yes and much of what a CEO has to deal with is internal politics. You realize
that "politics" in the general sense has a meaning and usage outside of just
government right?

>"that is not my assertion, that is the zeitgeist of popular opinion."

It's quite amusing that you want to take someone to task for their usage of
word simply because you have decided it is no longer "fashionable" and then
you go on to use the word "zeitgeist" incorrectly. See:

[https://www.merriam-webster.com/dictionary/zeitgeist](https://www.merriam-
webster.com/dictionary/zeitgeist)

[http://grammarist.com/usage/zeitgeist/](http://grammarist.com/usage/zeitgeist/)

------
ThomPete
After 4 1/2 years at Square colleague of mine and I, left Square to start our
own portfolio of small productivity tools some we are building ourselves and
other we will probably be acquiring.

Our first rule was that we will not get funding for anything than scaling a
business once it hit some sort of product market fit.

Until then there is only bootstrapping. This is to avoid something like
SoundCloud where you become numb to the die hard reality of needing to build a
business before you build an organization, get fuzzball tables and promote
your altruistic business principles.

------
TekMol
Is there a collapse? They used their VC money to pay employees to build stuff.
Now the money is spent. Employees get layed off.

It could very well been worth it. What has been built might bring in return on
invest for a long time.

Isn't that normal? Isn't VC money intended to be used that way? Are VCs
demanding to build jobs for eternity? Or is there some moral reason to not
grow and shrink the work force while building a company?

------
nunez
I haven't used SoundCloud that much, but the last time I seriously used it was
in late 2015 for finding solid trap music. Finding unsigned material was a lot
easier in 2014 than in 2015; everything in the first few pages was from huge
signed artists.

I also gave Go a chance so I could download stuff I liked onto my iPhone. It
was such a confusing service. I paid $9.99/mo to download tracks. There was no
way to download albums. It was also difficult to find things that I wanted to
hear. I cancelled after a month or so.

------
sddfd
What I never understood was why they were opening offices in SF, NY, and
London, without having the revenue to back them up.

In my eyes that was just flushing huge amounts of money down the drain.

------
Briel
There's a lot of focus on how they failed: strayed from their non-label
musician roots.

But how would they have been able to monetize?

* Let fans support their favorite musicians a la Patreon and take a % from the donations?

* Partner with music labels to help them scout their next upcoming talents?

* Help musicians book shows at venues and take a % of the sales?

------
StreamBright
Well, there were several attempts from different groups, companies and people
to build on their API that failed for no good reason. They simply decline the
API access request without any reasoning. They could have made money from 3rd
parties, or even through selling music directly on their site. I usually go to
Soundcloud to discover music and than to Bandcamp to buy it. I am not sure why
this was never a focus to them.

------
parasubvert
Open source remains an important force of continuity for technology
professionals, as even though SoundCloud is failing, they brought us a very
important piece of infrastructure that will carry on:
[http://Prometheus.io](http://Prometheus.io)

It has been catching on like wildfire everywhere I look, even big conservative
companies. It feels like the new Nagios (in a good way).

~~~
glasz
yes. and it was about bloody time the ugly crap that nagios is gets some heat.

------
loomer
It seems Discord is in the early stages of something like this. They have
dozens of employees and a pre-money valuation of 725 million US dollars.
However, very few users are buying their premium service, with most saying it
isn't worth it, with this paid version only coming out a year after the
release of Discord.

------
misingnoglic
SoundCloud used to be /the/ place for indie musicians to post their work - now
I think websites like Bandcamp have more or less taken over. This article
explains why - they basically stopped focusing on the artists - but I'm
surprised they didn't mention competitors.

------
playing_colours
As one of the engineers in those 40% fired, I asked myself if I should try to
start a startup: use this [0] money, plus try to raise more in the current
situation. Say, to implement a good old vision of SoundCloud - a cozy creator-
driven music catalog, with communities, and features like real time streaming.
But I guess, even if we succeed initially, the company will be eventually
killed by the major labels, copyright infringement cases, etc. It's a rough
territory.

[0] [http://www.thefader.com/2017/07/26/wetransfer-soundcloud-
emp...](http://www.thefader.com/2017/07/26/wetransfer-soundcloud-
employees-10000)

------
Myrmornis
This seemed to me a very sad story. The time during which SoundCloud as it was
known and loved really existed was the era before they were really worrying
about their "business model". As soon as they contemplated how they could
exist long term, they started copying mainstream music services in a way that
no-one loved. The real question is: given how much amazing free content there
is, how are we going to nurture valuable cultural ecosystems like soundcloud,
and create a meaningful and stable niche for them and their employees in our
economies?

~~~
narrator
The problem with the music business is the problem with the art business in
general. There are way too many people producing art and music these days and
not enough consumers.

The price of music is negative in that people have so much music available
that you'd have to pay people something or massively promote to get people to
spend time listening to a new band. Companies like distrokid seem to do ok
because they charge artists to distribute music. Fans really can't be bothered
to pay anymore.

I never said to myself, at least in the last ten years: "damn, I wish I had
more music". For me, music is "done". I have plenty, I don't need anymore and
it is of much better quality than what it used to be back in the 80s and 90s
when I used to spend a lot of money on it.

~~~
tjr225
May be a problem with the business but I think it is great for art and music,
not that you disagreed with that sentiment.

------
tovkal
It's always sad when a company has issues for months and nobody either sees
them or acts during that time. Though 'Desde la barrera todo el mundo es
torero'.

------
jackninja1
I think a few things are needed in order for SoundCloud to restore some of its
value:

\- They need to evaluate how their (IMHO) only competitor HypeMachine does its
things, and if possible consider an acquisition

\- While probably very costly they need to redesign their website (and app),
their latest redesign was received very negativly

------
arihant
I think the reason is that music subscription services took off in last 2-3
years massively, and globally. Apple Music expanded to a good number of
nations, so did Spotify and others. And so it has also become very easy for
creators to put their music on those services. There are SaaS apps that put
unlimited music on all platforms for artists for as little as $20 a year.

You don't need to partner with record label any more to be on iTunes, Apple
Music, Pandora, Google Play, Spotify, etc. You need $20 a year. The goliath
that SoundCloud was fighting killed itself.

As a creator, I know there are 10x more people listening on Apple and Spotify.
There is simply very less reason to upload on SoundCloud except for community.
And it is the community that they managed to piss off by partnering with the
labels.

------
Mikho
SoundCloud problem was that it tried to chase and copy competitors instead of
being unique--but it has truly unique user experience which it completely
ignores (probably need to write about it a blogpost). By following competition
you don't win. You don't get a leadership position. You just lose slower.

As a result, SoundCloud faced a notorious problem of wholesale transfer
pricing [1] power. And it didn't have enough money to win or even participate
in that battle.

[1] Wholesale transfer pricing = the bargaining power of company A that
supplies a unique product XYZ to Company B which may enable company A to take
the profits of company B by increasing the wholesale price of XYZ.

------
pasta
Maybe I'm missing something but this article is telling me Soundcloud is dead.
But is it?

Yes they are having a hard time but it there no way to continue with a small
team?

As a Soundcloud user there is nothing telling me it is dead. Fresh music every
day. So it's not like an exodus is happening.

~~~
chippy
>Maybe I'm missing something

Yeah, this was in the first section of the article:

"In early July, SoundCloud laid off 173 people — some 40% of its workforce"

and the rest of the article outlines the collapse of their business deals and
troubles.

------
shp0ngle
I would be interested in how BandCamp is doing. They seem to have a product
that both sides of the deal actually like - both buyers and sellers - and they
have a business model from the start.

I have no idea how big BandCamp is, in terms of both users and developers.

------
philipps
I would hate to see SoundCloud disappear or get dismantled in an effort to
migrate its user base into a different social network. The core idea, to
provide a way for amateur creators to share their music, and connect with an
audience, is sound. I also think there is/was a gap in the market for podcast
creators that SoundCloud authoring tools could have filled. Can some
combination of charging creators for advanced authoring or analytics, and
placing ads in a free listening tier, not provide sufficient income to keep
something like this going?

------
demarq
Bringing up the bieber situation is entirely unfair. SoundCloud did the best
any company could have done in that situation. His own label was also confused
by the move.

------
candiodari
> “Deals with the labels would have allowed us to have monetization,” said one
> former executive, who explained that no ads could be run across label-owned
> content without a revenue-sharing agreement.“We needed to make sure that we
> could grow unencumbered without a lawsuit.”

This sounds like a serious mistake. All the ones that succeeded asked for
forgiveness afterwards rather than wait until they had permission.

------
snakeanus
While I feel sorry for their employees I am quite happy that this happened.
The censorship that they applied to the content that they hosted was quite
disgusting.

------
blitzprog
From a consumer perspective, SoundCloud lost my interest when I heard it's 128
kbps transcoded mp3 you're getting when streaming songs.

No thanks.

~~~
abhi3
So until you heard its 128 kbps you had no idea? If that's the case then
there's no problem with it streaming @128

~~~
blitzprog
Wrong, I simply wasn't using it and heard of the service.

You can hear the bad quality by comparing it to a high quality version of the
same song on good speakers.

------
bokglobule
The tech industry keeps repeating the same business mistakes. This period
strikes me more and more of the 1998-99 era when there was so much euphoria
that there was no way but up. Then March 2000 came, the first Internet high
flyers started to fail, and very quickly the whole thing unraveled. We're on
the same road again...

------
drenvuk
Is it not possible to make a browser extension or app to "wrap" youtube and
turn it into a soundcloud like service? Seems to me they could transition a
lot of their users over to it and possibly save money.

------
BadassFractal
Should music creators who want a place to upload and get feedback on their
work move to a different platform now or is SoundCloud going to be around for
that for the foreseeable future?

------
Rjevski
Personally I lost interest in late 2013 when they redesigned their UI (and
made it crap) and started adding ads soon after. No thanks.

------
cubano
So what the hell is wrong with me?

I use SC everyday almost...I don't get this "collapse"?

Should I turn in my coolkid badge now?

~~~
phaed
Did you read the article? They ran out of funding and fired 40% of their
staff. The business collapsed, not the service.

------
rv77ax
Instead of pursuing major record label, did they not even though about
creating one?

------
shmerl
They could do what Bandcamp did instead. Bandcamp is growing.

------
briandear
Arial? There’s the problem right there.

------
erikb
If anybody else is also put off by the writing style: There is some actual
content there. One just needs to get through the first third which basically
just repeats the headline.

TL;DR (without my opinion added): Top Management started too late to think
about making actual money. They also hired an asshole for their US offices.
When they got an opportunity to be bought by Twitter they asked for way too
much money. And the CEO is bascially on a constant holidays trip since 2014,
while not failing to rub it in everybody's face via Instagram photos.

Personal opinion: I don't understand these CEOs who start cashing out before
either selling their business or making it a viable paid service, while being
so close to a lifetime solution to the problem of money. I mean he already
went 80% of the way, much further than most.

~~~
thinbeige
> If anybody else is also put off by the writing style:

The writing style is just fine, it's surprisingly high quality considering
this is coming from Buzzfeed (even if it's the new serious branch).

~~~
Frondo
Just an FYI, the investigative news division of BuzzFeed has been around for
something like two years now. It's not so new anymore. :)

------
Doctor_Fegg
Worth reading to the end for the deadpan Correction.

~~~
deanCommie
I hope it was Jeff Toig who raised it.

~~~
bartread
I was thinking exactly the same thing.

------
MIKarlsen
That's the second time this week I see Buzzfeed coming out with something that
resembles decent journalism. Coincidence, or have they turned their ship
around?

~~~
H4CK3RM4N
I think it's more that they have a few good contributors in with the nonsense.
For example, their Australian political coverage has consistently been
surprisingly good.

~~~
mrkrabo
Without reading a word of it, I imagine where it leans.

