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SoundCloud saved by emergency funding as CEO steps aside (techcrunch.com)
550 points by janober on Aug 11, 2017 | hide | past | web | favorite | 218 comments

I am surprised that the majority of commenters believe that this marks the end of SoundCloud. SC just secured $170M in new funding with $100M revenue run rate. They have a product that many users and creators love. The new CEO is a Harvard Business School grad with experience as CEO of Vimeo, a similar media business. He brought the COO of Vimeo with him. If SC can reduce cost (not knowing what the drivers are, it is unclear how easy that is), they might be able to reach profitability quickly. This might be the start of operating SC like a real company by a real operating team.

"The new management should provide some additional confidence. I’d interviewed both Ljung and Wahlforss in the past, and neither had answers to the big questions facing SoundCloud about its product direction, business model, and the spurious copyright takedowns that have eroded its trust with musicians."

On the other hand, existing employees equity value is likely wiped out in the down round. They are underwater on strike price of options, face additional dilution from prior investors' anti-dilution provisions and now liquidation multiples/preference from investors.

In fact Vimeo's pricing and core audience (largely-independent semi-pro uploaders of high-quality media content for promotional purposes) is identical to SoundCloud's. And Vimeo recently doubled down on that model, abandoning a massive Netflix-like product line in development [0]. So someone from that culture will be very well suited to promote stability of that business model.

What remains to be seen is his degree of financial control, given that Vimeo's parent IAC could presumably spare relatively large amounts of funding for it due to its stake in Match and Tinder. I have high hopes for its stability though.

[0] https://www.recode.net/2017/8/2/16086880/vimeo-subscription-...

> is identical to SoundCloud's

I haven't seen any hard numbers, but from my subjective experience and anecdotal data I'd say Soundcloud is closer to Youtube than Vimeo for a number of reasons.

Vimeo isn't focused on the social aspect. It's a platform for pros to share their content in hi quality which is the only reason these pros aren't using Youtube in the first place.

Soundcloud doesn't pretend to be a service for pros. Otherwise why stream at 128kpbs and offer such meager and ridiculously priced plans? Also no pro tools for distribution or even selling music like Bandcamp does.

Soundcloud is focused on the community and social experience much like Youtube or even IMGUR. This is why I believe it hasn't been able to monetize its efforts.

Either Soundcloud starts monetizing with ads or it becomes a real platform for pros.

Well, 128kbps sounds just fine on Beats headphones!

/s (I feel dirty just for typing the above.)

The streaming at 128kbps IMO has always been an anti-piracy measure; given that those previews are inevitably going to be scraped, make them just teasers rather than the real thing, and encourage purchase (or the cancer that is "Repost and Follow this random irrelevant promotion network to download" ... which is another problem SoundCloud needs to solve).

It begs the question, though - with such a large engineering staff, why has SoundCloud always linked externally for "Buy" links rather than running its own store? It could capture a lot more of the value chain and lower friction-to-purchase for indie musicians. Perhaps the reason was to not be competitive with its initiatives to get record labels (who likely prefer to drive sales through existing platforms for quixotic reasons) on board for SoundCloud Go. But perhaps with new leadership and recalibration, this could actually happen. RIP Bandcamp though... or maybe they just acquire them!

> The streaming at 128kbps IMO has always been an anti-piracy measure; given that those previews are inevitably going to be scraped

I've never thought about the problem but it should be solvable. If you only stream hi quality to logged users you can track their behaviour.

We will always be able to destroy whatever pathetic little protections are put into place. As someone who produces music and uploads it to soundcloud, and has done so for 10+ years, 128kbps is a good limit.

If they want higher quality they can ask me or hear it when I play out.

Also, IIRC, there is a 'allow high-quality streaming for logged in users' checkbox in the upload editor.

> If they want higher quality they can ask me or hear it when I play out.

This defeats all the practical advantage of the internet removing limitations.

I can't ask you because I don't have an account and will not register one to do so (I actually did once to get in touch with the artist and he gave me shit) and I can't hear it when you play out because I have no idea when and where you play out and we don't even live on the same continent.

Defeating the whole point of its existence points to a non existent future. I used to use soundcloud because I could discover music and artists and download hiqh quality files. I don't go there anymore and am back to discover music and artists on file sharing between people which I've been doing since before the democratization of the internet.

You assume everyone wants as many people to hear their music as possible, under all circumstances and environments. A lot of artists want some control over how their art is consumed (as an example, I would like for people to hear my music first over a high-quality sound system, not some shitty car stereo or beats crap), which a users-first 'UX' mentality attempts to commodify.

(And before someone points out what appears to be a contradiction with my previous statements, while I think SC is for its users, its original design was much more artist-centric and extended lots of control to the people who create its content)

It sucks that the artist you reached out to decided to be lame, but my experience doing that has been the opposite.

SC still offers a download option, and as long as your track isn't flagged for copyright you can set it and unset it freely, so the lack of ability to download from Soundcloud has more to do with the artists you are browsing and/or Soundcloud's UI.

By the way, I am fully in support of piracy, so no objections here. As a principle it stands for the ownership of bits and against the commodification of art. Piracy encourages individual pursuit, curation, effort, and even creativity. Youtube and its consumption culture value none of these things.

Soundcloud does a great job at frustrating me by suggesting lots of great tracks I'd love to play which I can't find available for sale anywhere. I am happy to pay for high-quality downloads via beatport / juno / bandcamp etc., but my experience with Soundcloud has been that it's rarely worth bothering to look. I don't really understand what's the point of good music discovery for previews only, if I can't get at the actual content.

Often this is because they are unofficial remixes or otherwise "grey area" content where the licensing isn't in place to be able to commercially release. If you make a track using element from a well known artist, often that track will be allowed to exist in the largely non-commercially exploited environment of soundcloud but as soon as you want to release it for money then you will be hit with a copyright takedown.

Most of the artists I follow include links to Beatport/whatever and other music stores in their tracks. If yours aren't, why not ask?

Who would I ask? Most tracks on soundcloud aren't posted by the people who would be selling them, so far as my experience goes.

> If they want higher quality they can ask me or hear it when I play out.

But that would defeat the purpose of streaming services: convenience.

> IIRC, there is a 'allow high-quality streaming for logged in users' checkbox in the upload editor

Maybe for pro users. I just uploaded a file and didn't see that option.

> But that would defeat the purpose of streaming services: convenience.

Many of us oppose this level of convenience as it cheapens our art. I'm happy to hand out mp3s or even allow them to be downloadable, if someone wants them.

And it looks like HQ streaming disappeared as a feature, just like communities. Unless it's still on pro, but I wouldn't know since at some point they converted my pro account to a free one.

Why would hand out audio files in a format that has been obsolete for a few decades ? Give me flac or any other lossless format that I can convert to flac.


And mp3 is not obsolete...far from it. 320kbps is still the goldilocks standard among Bittorrent scene, and unlike the current format du jour (what is it now anyway?) it still plays everywhere

Playing a track through soundcloud's (awful) player and downloading a track are the same action, from their perspective.

did Vimeo's core crowd also leave the platform?

Well I'm surprised too that people would believe that this marks the end of soundcloud, as the end of soundcloud happened when they preventively deleted many DJ sets in anticipation of a future licensing deal with labels circa 2014, when the labels gets in the picture to take their share of the money usually marks the end of the website. The deal failed, in turn failing the exit option to be bought out for a hefty sum. Then the soundcloud purge happened in 2015, then as expected soundcloud was losing millions and faced financial issues. Then the agony continued and still continues, as if it didn't know that soundcloud is already dead.

Maybe it will be bought by AOL or yahoo to prolong its agony further.






> Maybe it will be bought by AOL or yahoo to prolong its agony further.

you mean ... Oath

> The new CEO is a Harvard Business School grad

Yeah, they're toast.

That is just a bias that I recommend you try to get over. It will help you better assess people and situations.

We can debate the long list of HBS graduates that have been amazing operators in tech companies. Every CS grad isn't a great CEO & every HBS grad isn't a terrible CEO. I wish the world was that simple.

I could counter that you need to get over your own bias, which is the implication that a CEO is going to be successful or is suitable for the role simply because he went to Harvard.

I didn't claim that. Please re-read my comments and point out where I claimed that. I said "every HBS grad isn't a terrible CEO". It does not imply "every Harvard grad is a great CEO".

On SC specifically, I do believe that a company that has had issues with financial management and business model will benefit from someone with business training and experience operating a media business with similar characteristics. Kerry seems like a solid hire for the role. He may still fail.

> The new CEO is a Harvard Business School grad with experience as CEO of Vimeo, a similar media business.

If you didn't intend to express a bias then what is half of that sentence, other than unnecessary filler?

Everything is situational. Given the set of problems that SC has in terms of business model and financial discipline, the ideal job spec would ideally have academic and work experience in the relevant area.

HBS is probably as good choice as any if you are going to get a general business background. And CEO of Vimeo seems like a great work experience with substantial ability to pattern match.

That is very different than saying that “all Harvard grads make great CEOs” If the biggest challenges were legal, I would probably want a CEO with both theoretical and practical legal background. If the biggest challenges were related to security, I would look for someone with background in security, etc.

My bias is finding a CEO with relevant prior experience. Especially in a turnaround situation, I would not want a CEO who is learning on the job.

>My bias is finding a CEO with relevant prior experience.

Should've stuck to just 'CEO of Vimeo' then. In most tech companies an MBA exec is seen as a negative (at least by the engineers). What you did matters more than whether you have a degree or not.

First, you are arguing that I should hold an opinion, because most other people hold that opinion. I prefer to think independently.

Second, you are presenting this as an “Or” between education and experience. If I had to choose, I agree with you and I would also choose experience over education. However, it is a false trade-off since this CEO has both which I would choose over just having one.

Nonsense. And even if true, that's irrelevant to whether they're well suited for the job. Engineers aren't oracles, they have stupid ideas and weird biases too.

You conveniently left out that he mentioned the CEO also had experience at Vimeo, a media company with a somewhat similar business model.

I chuckled at that one as well. [1]

You'd be surprised at the number of graduates doing simply ordinary or mediocre things. Not that there is anything wrong with that - not my point. Just that the halo is often the best thing that someone is left with years after graduating.

Now if someone were to say that a Harvard Business School grad came back home to try and help their small family business I might think the statement is more appropriate. But at the level where you get a job like this not as much so.

[1] And I went to one of those 'good schools' (Not that one but in the same category let's say).

>>Just that the halo is often the best thing that someone is left with years after graduating.

I do not exactly get what you are trying to say here. I'm not being snarky but rather genuinely curious. Could you explain?

The halo 'the branding' of the school is very often more powerful than what you actually learn there.

Maybe similar to getting an academy award is better than whatever money you might make from getting an academy award (or a nomination).

The branding and the halo of that degree opens up doors and generally tends to lead to positive acceptance in a wide variety of situations.

The idea that success or failure has much to do with the CEO is I think mistaken. For sure the CEO can do plenty to screw things up, but not so much to make things better. So for the most part the best you can aim for is to get someone who isn't going to screw up big time.

>> Yeah, they're toast.

> That is just a bias

OK. Later:

> We can debate the long list of HBS graduates that have been amazing operators in tech companies

How is that not survivor bias?

It may be a bias, but it is founded. This guy is here to do business not music or sharing, he lacks the actual experience and understanding that he'd have if he were an artist or music lover, which will eventually achieve to kill soundcloud as it was or could have been.

Because Vimeo is such a corporate money-focused alternative to the artsy YouTube?

People don't list "music lover" in their resumes. Nor does the fact that he's a professional CEO means he's tone deaf (pun intended) to the company's vision, or that he will destroy it (due to malice or musical incompetence).

Why do otherwise intelligent people (I'm assuming) continue with this garbage heuristic?


The greatest competitive threat comes from three guys you've never heard of in a garage. Not from a Harvard Business School guy.

To be fair, in this case their biggest threat seems to be running out of money.

I was thinking the same, just what Soundcloud needs..... :-\

Is there any guesses as to what said wiped out employees might do in regards to sticking around?

Ooooh boy. This feels like the kiss of death for SC. So many startups hit this point and then get rescued at the 11th hour with more funding... on the condition of ushering in a new CEO and COO to try and pivot the company's direction. They completely change up the product and drive away the users, and the entire thing collapses like a house of cards.

Seems to me like completely changing up the product was the previous direction (trying to squeeze in some kind of spotify-like product), and the article mentions explicitly the new CEO want to get back to the core value of the service.

Of course, we'll see what they mean by that and how it will be executed, but it sounds like good news, actually.

That's the problem tho, isn't it? The core value of the service was great for fans, but not for any sort of business and certainly not for the labels (without whom SC cannot exist and hope to make any money whatsoever).

Why does SoundCloud need labels? They just need a way to make money with independent musicians.

I also believe it can make money on independent musicians. But can independent musicians money scale to VC expectations?

Well at this point the expectations are a little lower. "Anything but going all the way to zero" seems like the current tone.

> "Anything but going all the way to zero" seems like the current tone.

You don't invest in a company without expectations of ROI

I'm not a VC so I may be totally wrong here, but it seems to me that what they expect to scale is not revenue, but valuation (providing further investors match this valuation). Should Soundcloud revenue raises slowly but they do an IPO, I guess investors would be perfectly fine.

Edit : of course, it seems their doing a downround, so those expectations are not in good shape either.

I think it's tricky specifically with DJ culture in that if I make a remix or a mashup and that includes somebody else's content, that content needs to be licensed.

When a DJ is spinning in a club or venue however using someone else's content is covered by the venue in the form of fees paid to ASCAP, BMI or some other such publishing rights society.

> When a DJ is spinning in a club or venue however using someone else's content is covered by the venue in the form of fees paid to ASCAP, BMI or some other such publishing rights society.

This is not true in many parts of the world.

Care to elaborate where in the world artists don't have access to performance rights societies or copyright collectives?





Its up to the artist to register with a PRO or to affiliate with a publisher that will do so for them. ASCAP despite the A in the name will collect performance rights worldwide and anyone that meets the basic requirements is welcome to join regardless of what country you live in. See:


The problem is much of the independent content like remixes touches major label copyrights.

Without a label licensing deal, soundcloud is not worth buying due the risk of a lawsuit.

Then some enterprising lawyer should arrange a class action lawsuit on behalf of one-off independent musicians against the labels for those labels interfering in the independent musicians' ability to exercise their copyrights.

SC existed fine without labels. Most of the music underground that SC originally hosted for was micro-labels and independent producers. Soudncloud as a platform was NEVER a good fit for mainstream music as published by Hollywood labels, and I think much of the site's woes are because they tried to make it fit.

Soundcloud needs a blanket "no music published by a major label is permitted" There are of course copyright issues on remixes/whatnot but those really needs to be worked out in a court of law, in favor of producers.

>"Seems to me like completely changing up the product was the previous direction (trying to squeeze in some kind of spotify-like product), ..."

Wasn't this a necessity though due to some of the content hosted by SC being owned by the 4 major record labels?

Don't worry, SoundCloud has been driving away core users and artists for years now. Can't see what's wrong at this stage with a final throw of the dice from someone with different ideas.

Where are the bedroom DJs and indies going now, then? I think soundcloud is still the place to be. I'm a daily user.

Those who didn't leave soundcloud in 2014, left after the 2015 purge. Many went to mixcloud.

I've been using SC since 2011 and didn't even know about these exoduses. I even though it was getting more popular. Guess I was out of the loop.

EDIT: I just created an account on Mixcloud and searched for 11 artists i'm following on SC and not a single one had a presence on Mixcloud. I'm calling bs on that.

mixcloud, bandcamp

what kind of things has it been doing to drive them away?

Isn't the point that SC messed up by trying to compete with Spotify and now the new CEO/COO are going to double down on the "Youtube for music" option?

I mean I get why SC went the direction of Spotify, Youtube is going that direction too!

Unfortunately, Youtube is the youtube for music. :(

Unless you turn your screen off. Then it's just silence. Lots of it.

I thought they allowed that? Though, pay only via Red

edit: Why the down vote? I was serious - I thought with Youtube Red you could listen with the screen off, am I wrong? Perhaps I misunderstood your screen on statement.

edit2: Well, as others confirmed, it is indeed allowed via Youtube Red like I said. So my post being down voted makes no sense, the OP was wrong. Get your shit together HNer.

edit3: Well, the down vote has been reverted (or upvoted out of it) - regardless, I probably overreacted. To be clear, I don't care about the "Karma" (I try to recreate accounts somewhat often for privacy), I just get irrationally angry when it feels like people try to silence you for an unexplained reason. It's why I hate Reddit.

Just getting YouTube red is a great solution - for those two or so countries where it's available. Most of us here in the non-US part of the world don't really have that option.

I often forget how broken the web is for the rest of the world.

I flip out if a Youtube video isn't "available in my country", I can't imagine seeing that frequently. My sympathies.

This is payback for everyone else getting Spotify before we did.

Making you pay to turn your screen off is not "allowing" it in the normal sense. It's valid for someone to see your comment as wrong. And since it's easy to figure out why, you should not get upset over lack of explanation.

I mean, it's a video service that is paid through visual ads. Expecting free content is a bit entitled, imo.

Though, if Youtube was to become "Soundcloud", having Radio specific ads would be a nicely adaptive feature for the "free" audience. However, given that ads are required, screen on vs pay is very reasonable. There is an avenue for screen off, legit and implemented as a feature.

> Making you pay to turn your screen off is not "allowing" it in the normal sense. It's valid for someone to see your comment as wrong.

I disagree, the feature is there, that someone just doesn't like how to access it. Saying something doesn't exist / isn't allowed is a false statement if it does exist. The requirements for being allowed were not being discussed.

This isn't about presence of ads. They are there either way. I will be looking somewhere else either way. This is purely about annoying the user.

> I disagree, the feature is there, that someone just doesn't like how to access it. Saying something doesn't exist / isn't allowed is a false statement if it does exist. The requirements for being allowed were not being discussed.

You are not allowed to park here. And by that I mean you are 100% capable of parking here, parking here exists as an option, but you will be fined $75.

It's valid to see turning off the screen as "not allowed".

Well in your parking example, I think the better example would be, "not allowed to park here without a pass".

You are allowed to park there, if you have the pass. If someone told me I wasn't allowed, I'd assume there was no way for me to park there. If someone told me I was allowed with requirements, then I know I can, if I can obtain the requirements.

However I see your point of capable vs allowed, I just think it's a valid distinction to make. I'd never tell someone that they'd not be allowed to park somewhere, because that's not the complete picture. They might leave, thinking that there's no way for them to park there. That's not true at all, and I'd be in the wrong for misleading them, imo.

Load YouTube in Firefox for Android. Turn off screen. Enjoy music.

Sidenote to all these youtube red comments - probably you're paying for youtube red through your google play music subscription. Just a FYI, you can just use google play music as a youtube music video browser. Helps when for example you're chrome casting to something and don't want to change back and forth between GPM and youtube apps.

Thankfully, as Youtube is not using DRM yet, you can simply use a different browser or client to stream or download things however you like, where ever you like and as often as you like. Embrace your freedom.

Unless you are a paid subscriber, then it keeps playing!

Ironically enough I last got bit by that trying to listen to Depeche Mode.

youtube-dl can pull the m4a files, vanilla music on android plays them without re-encoding and my desktops which are all Linux support m4a just fine.

It's almost embarrassingly easy to pull a 400 song playlist of the genres I like (outruns and synthwave).

All I need now is a simple, lightweight youtube browser to find URLs to plug into youtube-dl.

In fact you've helped me remember that I haven't donated in a long while.

A happy side-effect of getting YouTube Red was this doesn't happen anymore.

Yea.. I got down voted for saying the same thing. Thanks for confirming, I thought I was going crazy.

Kiss of death is probably the wrong term. It's not like these companies are healthy and decide to cash out to some rapacious VC. More like like CPR: lifesaving but usually comes with a lot of injurious complications. Yes, grandpa was never the same after his heart attack, but the nursing home seems like a better option than the funeral home.

They already pivoted, though, and that pivot was their downfall.

I understand that the goal of any business is to make money be profitable, but SoundCloud went from being a resource for independent musicians to an also-ran in the subscription music streaming race.

> They completely change up the product and drive away the users, and the entire thing collapses like a house of cards.

The company will collapse if nothing is done. The only downside to trying something new is that the company might collapse a little bit sooner if the new direction doesn't work out. On the other hand, there is a chance the company can be saved, so it seems like they might as well try it.

SoundCloud's problem was going too big too fast. The investors think that SC is going to compete with iTunes/YouTube/Spotify/etc. It's not. It's an audio file hosting service. It has incredible professional use cases, but it is not a mass market audio streaming service.

It wasn't too big too fast. It was the wrong direction entirely. They misunderstood their market and their product, and thought they could become Spotify.

It's like Etsy deciding they want to be the next Amazon.

Agreed. They decided to chase more users, instead of trying to foster relationships with artists and smaller labels.

Chasing more users makes sense if your objective is to increase the price tag and be bought.

Foster relationships with users makes sense if you want to build a long lasting community and service. But the record industry will attempt to destroy you if you grow too much.

Agreed. I've never personally seen it as a source for music I want to listen to on a daily basis (though clearly a lot of people do use it that way).

At one point, back in like 2012 when trap was all the rage, SoundCloud had interesting stuff coming out every day. I'd listen to it in the car, and was annoyed at the bug where turning your phone to landscape required switch apps then switching back to trigger SoundCloud to actually reorient itself. It was my source of new music, and going to trap shows and clubs in the Bay Area, I'd know what was being played even if it was super new. I remember making a joke at one point when some friends commented on my SC usage that "I only listen to music that was released today".

We lived in the future for a little while there.

I'll evolve that wonderful quote slightly: "I only listen to music that was made today" could be an amazing guiding principal for SoundCloud that differentiates it from Spotify et al.

Slightly OT: I understand how people feel about SoundCloud. But I am surprised that most of us exactly know what went wrong. They know what mistakes the management did and where the product should have gone. They know for sure how to lead employees, in good times and in bad times. They know when you should hire and when you should fire.

I wonder how many of us who are so fast in judging have really run a mid- or late-stage startup and know what they are talking about.

I know just one thing: Leading and managing people is a super tough job. We are not talking about leading a small team. No, it's leading a corporation and worse, managing investors who are chasing you night and day and playing power politics for years while being the nice daddy VC writing witty blog posts. And don't forget the three labels who blackmail you to death but are shareholders at the same time. Stuff nobody knows. We only know that Alex went to Burning Man and fired 173 people. So he must be a bad CEO having no clue of music, product and leadership. Of course.

It's easy to give good advice from outside. But it's so hard to understand what actually happens inside. All of us who managed just a small company know what I am talking about.

Managing machines, code or even a Kubernetes cluster is easy as pie compared to what the SC founders were going through the last years. Machines are predictable, humans are not. Just read Machiavelli's The Prince and get a notion of what people are willing and able to do to deal with other people. Backstabbing is their daily business and Game of Thrones is not that far away anymore from the life of a venture-backed CEO.

Not that I like Alex and Eric very much or what they did. Honestly, I don't care at all, I find SoundClound's products and the repetoire rather mediocre and I don't believe in online music as a healthy business model.

But I don't know any founders in Europe and in Germany who raised that big funds and could keep control for that long and the product still in an ok shape. Look what Travis is going through right now. For some who have never been in such a position, they just can't imagine how high the pressure and extreme the psychological stress is, how many ultra aggressive sharks are floating around you just waiting for one single mistake. Then, loosing control of everyhing happening in and around your organization happens quicker than you can think.

The problem is this bullshit game of business as you described. Soundcloud shouldn't need that kind of headcount or costs. We need new models of business that lock out the existing shareholder and management classes and their toxic thinking in favor of a structure that is far more equitable and hierarchically flat. Soundcloud is and was only ever for the users. A small power group (headcount-wise) trying to monetize SC will always be doomed to fail.

So many beautiful ideas are destroyed by the greed and avarice that underpins 'fiduciary duty to shareholders' and their expectations of unnatural and unhealthy growth.

You get two covers: one on the way up, and one on the way down. Nobody complains about the first one.

No need to run a mid or late startup to know that in this kind of endeavour, the minute labels jump in to get money waving copyright around, it's over.

> nice daddy VC writing witty blog posts

lol ... waiting for him to talk about the rampant pedophile problem on Kik

Just like every John Doe currently knows exactly what Trump should or shouldn't do in regards to North Korea and how China will react. You're mentioning a valid point, but this behavior is always the same. I guess that's human.

Sources from the company told us the layoffs had been planned for months, but SoundCloud still recklessly hired employees up until the last minute, with some being let go within weeks of starting. Employees told TechCrunch that the company was “a shitshow” with inconsistent

It's sad that the execs get free pass on ethics violations like these. And there are no consequences for these execs. And I don't understand why after such violations people still stay with the company.

Reminds me of something I was taught by one of the best execs I've worked for: 1 round of layoffs, if it has to happen, is a good thing. Better to do it when needed than not do it and the whole company dies soon afterward. Multiple rounds of layoffs means they still haven't addressed the problem and probably don't even know what it is. Hiring right up until the last minute sounds like a similar situation. It's an emergency move - if they don't make their hiring smarter it's going to repeat itself.

Well mostly free of consequences. The exec team has basically been replaced and SoundCloud may still die as the result of these actions. As for why people stay with the company, there are a couple reasons. For many people, especially non-engineers it can be difficult to find another job. Many people are probably helping to try and get ex-coworkers jobs. Some may believe in the new direction. Others may be for various personal reasons, semi-stuck in the job. My guess is that you'll see a decent number of people (20-30%) leaving over the next 6 months, but that the majority will stay and help reshape SoundCloud as long as it looks like the company can still succeed.

I'm really questioning if they can really do much reshaping with the small amount of engineers remaining. Soundcloud has probably one of the most complex architectures and just lost a significant part of the people that know the system.

That's the $170M question. I definitely would be concerned about the lack of engineering. That said, the people left will find that they're able to complete significantly more work since there is less communication overhead. They will also certainly will be working on very focused projects that will affect profitability.

Then that brings up the important question of how many millions it would take to replace most of the infrastructure with something simpler.

Can't SoundCloud be the recording studio that signs on popular and promising indie artists (such as SoundCloud rappers like Lil Yachty or XXXTentacion who have to promote on their own) and provide marketing, music production connections and management for them and in turn earn a royalty/cut.

This way it doesnt alienate its users but in turn empowers and supports those that people like?

Just my two cents, I could be totally wrong or that they do this already, happy to hear any feedback on this.

They could, although there's a number of other players already in that space... https://www.audiomack.com/ comes to mind (but I know the lead developer)

In a way that validates the idea, if it was successfully tried out by another company that could mean a lot of potential for SoundCloud simply due to SoundCloud's brandname and mass amount of content contributors.

I haven't heard of Audiomack before and I checked out their website right now but I was inspired for the music management idea after seeing a lot of Youtube music videos from indie music artists linking their SoundCloud in their descriptions so I see SoundCloud more filling in the gaps better because its what musicians are sort of trying to do with SoundCloud but hacking it together in a rough way.

Edit: As well, I had a friend who was producing music and singing with some rap and RnB who heavily relied on SoundCloud and I noticed he basically self-funded his music videos by holding parties and filming it as well as promoting his music by literally going around and playing it. I think young and upcoming musicians struggle with entering the mainstream and SoundCloud can help due to its heavy base of indie or not-yet mainstream musicians and listeners.

Does SC help fledgling artists get "discovered" and get record deals (financing for their art)? Could an integration with something like Patreon help increase the value of using SC: first for creating content, then for allowing others to consume it.

Also, how has BandCamp done so well as an independent music service? Any lessons to learn there and to apply to SC?

On your first point, 100% yes. I used to run a relatively popular new music blog, and have several friends who still do. SoundCloud used to make up 98% of my blog post music embeds. And that is absolutely where they went wrong, even from the get go. It would have been insanely easy for them in the last decade to implement: one-click .mp3 purchases for individual songs, artist merchandise stores, ticket sales, etc. You name it.

Instead they made a conscious decision to push ahead with bizarre business strategies and without providing any meaningful functionality updates to their core service (I even think they regressed in this regard, the dumpster fire that was song reposting was the final nail in the coffin for me).

Honestly I think the service needs to make a graceful exit to let another service emerge who actually wants to push things forward for developing new artists.

> they regressed in this regard, the dumpster fire that was song reposting was the final nail in the coffin for me

Absolutely, repost spam (particularly repeat reposts of the same song so it would stay at the top) making the feed unusable was what drove me away. Then all the random bugs that persisted for ages, and frequent weird/unnecessary UX semi-redesigns. One bug I recall is that going to a song page then back to the feed would never put me back at the same point in the feed.

> It would have been insanely easy for them in the last decade to implement: one-click .mp3 purchases for individual songs, artist merchandise stores, ticket sales, etc. You name it.


SC was too focused on the social aspect instead of trying to be a useful tool for music/audio pros.

> Honestly I think the service needs to make a graceful exit

Couldn't agree more.

Does amazon still hold the patent for one-click purchases?

I can't believe they were ever allowed to have that patent in the first place.


Looks like it expires soon, and even so it's been restricted to a shopping cart model.

What in the world. Did not know this existed.

Gonna apply for the patent on two-click purchases...

Bandcamp gets a cut of sales and has a small (I think remote) team. They scaled slowly with revenues/profits and don't have big marketing spend and lavish offices around the world and a huge workforce.

I always wonder what Twitter would be like if it went this route.

I mean, maybe I'm hanging my ignorance on the clothesline here, but the product is built, yea? Do they really need that massive warehouse in the Tenderloin, AND their global offices?

Bandcamp should be viewed as the indie record store of the digital age. It's can keep it's cool without being fancy, and niche users will spend money there to support the bands that they personally enjoy. Additionally, band camp doesn't require nearly the same server load that a social media company would, nor anything fancy technically.

Twitter on the other hand could never have been built without being venture funded from the beginning, the growth of their product was only possible because it could scale and have the kind of uptime it did, and that venture funding allowed them to hire the engineering talent that made it all possible. Maybe now, twitter could lay off 90% of their staff and figure something out, but it seems pretty unlikely that would be the case.

Kinda yeah. A big reason Twitter has the ad revenue it does and the celebrities posting that it does is because it throws lots of non technical people at ad agencies and talent management groups to get them on board. Those people need desks.

So twitter is nothing but marketing and PR ? Why am I not surprised ?

Exactly. The only problem with soundcloud is how much money they waste.

SC does not help getting discovered, although the discovery might have happened also through it. And the discovery is most definitely what is problematic with SC because once discovered, the label comes back at the catalogue with a vengeance :)

Patreon could help, but not every artist on SC is fine with staying indipendent when a big label approaches them, at least in the space I follow (electronic/EDM), simply because the real money is in live shows, and you get bigger shows if you have bigger "shoulders"

I think bandcamp is doing well because it's a different service (store first), for different customers (people that mostly can't care less for popular music), where the music uploaded (almost?) never is in copyright gray areas...

> SC does not help getting discovered

Maybe you're speaking statistically here, but every time I find an artist's music on SC, I end up finding 3-5 more artists like them that I really like. So, maybe it's anecdotal, but I certainly enjoy SC for its discovery aspects.

> Also, how has BandCamp done so well as an independent music service? Any lessons to learn there and to apply to SC?

If you mean financially, it's because they take a 15% cut of an artist's sales, up to $5k, after which it drops to a 10% cut and they also take out CC processing fees.

IMO, if SoundCloud were smart they'd find a way to team up with BandCamp right away. Unfortunately, I don't know what BandCamp would get out of it.

I actually make money off Bandcamp. My friend Dub Gabriel does so we'll with selling vinyl on Bandcamp he pays rent in San Francisco from it. SoundCloud was great for new hip-hop acts when you could combine a decent tune with see numbers gaming to juice attention.

Probably worthwhile to link this HN post of SC's own announcement: https://news.ycombinator.com/item?id=14991071

Yet another example of a great service that was killed by all the wrong kinds of licensing issues. Artists always saw the discovery potential in SoundCloud but bean counters just saw an opportunity to put the squeeze on.

This is what happens when a startup fails. The problem with SoundCloud is that Spotify ate their lunch. I'm not sure this is solvable -- it's like being second place to eBay. Trainor might not be able to do much unless he pivots the company Jobs-style, which isn't an easy feat.

I have to wonder why the VC sunk more money into SoundCloud. Do they see an opportunity we don't? Or is it politicking? Hard to tell.

Soundcloud and Spotify fill very different niches in the music streaming market. Spotify is slightly more difficult to break into, you have to either be signed to a label or start your own label and get set up with a distributor to put your music on it (just like Tidal or any of the download stores). With Soundcloud, you can upload anything you want, and the barrier to entry is very low. It's important to those of us who are discovering new artists for whatever reason (DJ, record label, promoter, management, etc.), because artists can put their music on Soundcloud for the world to hear without already being involved in the industry.

Soundcloud Go turned them into a competitor with Spotify, but that was never their forte in the first place. They just saw it as a way to possibly make money. I think they need to focus on the community aspect of things, and see themselves as more of a social networking tool centered around music rather than yet another music store/streaming service.

It absolutely isn't hard to get music on Spotify. DistroKid (distrokid.com) is $20 a year to upload unlimited tracks to all the music services.

But, you're point about being able to upload "anything" to SoundCloud stands. It was a place for remixes, demo tracks, podcasts, etc. You aren't able to upload just anything to the music streaming services. (need album artwork, etc)

And your last paragraph is spot on. I'm surprised we didn't see them release their own mobile OS and phone /s

jmreid is right, it's not hard at all to get music on Spotify (I've used CDBaby for 3 albums so far). But yes, you're absolutely right about focusing on a 'sound-oriented social networking tool'. If that was the direction, then I'd see no real monetization opportunities outside of advertising (and premium to remove ads).

I still go to SoundCloud to listen to new music from Techno artists. I guess that's what it started with. Nowadays I find mixes on SoundCloud and MixCloud. I find YouTube has plenty of material found nowhere else but not always that particular kind of stuff.

For a lot of the stuff I want to listen to, YouTube has it too so there isn't really much difference. However on iOS you can't have YouTube running in the background (there are some tricks to make it play a single video, but not a playlist), so SoundCloud wins for that - and the bandwidth of audio is less than video.

Thank you for mentioning MixCloud, I was not familiar with it and from a quick browse it seems great for my tastes (EDM live sets).

The problem with Soundcloud is that grew too big and as a result aren't building a site for their core customer: indie artists. Take a look at the front page, all it shows is tracks and artists that are already hugely popular. The features they are focusing on seem to be a hodgepodge of things taken from Spotify and Last.fm, but without any real value-adds for someone who's just uploading music. I recently made an account for a new project I'm working on and all the organic traffic I'm getting is just spam. Bandcamp is now the place for unsigned artists to go to promote/sell indie music.

Honestly they handed their own lunch to spotify and then cried when it got eaten.

They were completely different services for different artists and different audiences, until SC tried to force a premium service. That's when Spotify comparisons started and drew users away.

An anecdote - I won't pay for more than one music subscription on a monthly basis. I won't even choose apple music or tidal or amazon music (if it wasn't included with prime) over Spotify. Why would I pick soundcloud when it has a smaller catalog and a worse UX?

Same here. I pay for Spotify and I'd never start paying for an additional one. SC has to refocus on what people originally went there for: in-progress works, experiments, remixes, one-offs, etc etc.

I'm not sure this is solvable -- it's like being second place to eBay.

Kinda a funny example, since nowadays I mostly think of eBay as an also-ran to Amazon.

The article alludes to $169.5M raised at a pre-money valuation of $150M. I'm not sure I've ever seen a round like this take over 50%. Who knows what the future of the company will be, but one thing is for sure: it's completely investor-controlled now.

Wasn't the valuation at more than 700 million some time ago? What are all the consequences of dropping the valuation from 700m to 150m? Any ideas?

Dilution as usual. The last investors, whom I believe invested at a higher valuation, have had their liquidation reduced. The founder shares are probably highly diluted; I can't imagine the founders owning more than 10% combined.

Soundcloud offers an amazing service that benefits everyone that uses it. In a modern technologically competent socialist society, why can't something like this be run by the government?

The amount of art that would be lost if soundcloud actually shut down is tremendous. There's a public interest in keeping it around, in my opinion

Umm no. Listen, I love SoundCloud, but government tax dollars should not be in the business of providing electronic music. At least US tax dollars, Germany can do what it pleases.

In their defense, they said, "...something like this..."

Of all the things my tax dollars get spent on, promotion and preservation of the arts is an area where I really wish we'd spend more. It's not like we have a shortage of bombers.

Why not? The cost of running Soundcloud is comparable to the cost of one F-35 jet.

It would be funding a distribution platform for art. Most of the music on soundcloud is free for anyone to listen to. That's a public benefit, in my opinion.

>The cost of running Soundcloud is comparable to the cost of one F-35 jet.

This comparison is like saying "if all we do is capture 1% of a huge market, we'll be millionaires!"

There's quite a bit more to it than simply saying "Build one fewer JSF boondoggle, please. We need to prop up [pet project X]." Considering that comparison is used hundreds of times daily, I might add... it's not exactly scalable.

The F-35 is a boondoggle to say the least but I actually think the ROI on it is considerably better than propping up SoundCloud.

The amount of music that has been lost because soundcloud deleted it to try to get a licensing deal with the industry is already enough.

Such a centralized and proprietary service fate is to disappear eventually taking down everything with it.

You want this 'art' to stay around, post it directly on archive.org

> You want this 'art' to stay around, post it directly on archive.org

I... had never actually thought of that before.

Because there aren't modern technically competent socialist governments that value this art.

Why stop at SoundCloud? How about Tumblr, Instagram and YouTube? /s

I agree, why not? A 21st century socialism for a 21st century people

Why should we not want the public spaces to be publically owned?

How does SoundCloud need 173 employees to operate? I mean, they laid off 40% and nothing seems to have changed so they clearly didn't. I wonder why startups tend to run so inefficiently. Has recently happened to Twitter, Etsy, etc. I imagine the companies could still be a lot more lean staff-wise than they are.

Reddit now has 230 employees and their latest (for me) user visible change in a year has been super aggressive broken caching where you post a comment and it doesn't appear until a complete reload.

- Scaling down a company is generally hard and (lately) not done as often. It's pretty difficult to spend 6 years where hiring is your biggest priority (from executive level on down) and then all of a sudden it isn't.

- It's quite common for investors to push hiring more people as a way to get more stuff done. The general refrain you will hear from many investors on how to (move faster|fix problem) is to hire for it.

- The default thing to do with capital to invest is to acquire/hire.

I guess to summarize, staying lean just isn't a priority for these companies or their investors. The expectation is enormous growth or failure. The reality is often quite more nuanced.

It is really hard to be efficient in terms of headcount. Every single manager inside the organization has a personal incentive in pushing to hire more people cause that's how we measure career growth. So they all come up with all sort of BS to justify hiring more people.

The crazy thing is that it should be exactly the opposite. People should get more credit for achieving X with as few people as possible. Instead it works the other way round.

Interesting insights... thanks to you and parent. I have been thinking about this for a while. It feels very broken.

Programming at work will not be same without SC. 8 hours per day of productivity boost.

DI.fm - was my favorite for many years. But it's Flash only that crashes often and extremely annoying ads. Spotify - ads and the discovery is broken. I usually listen to mixes and Spotify is more for albums/artists.

Well, you could subscribe to their service. As a premium member you get stream links for plain high-bitrate MP3/AAC streams - no Flash, no DRM, not even a webbrowser required.

DI.fm has an iPhone app.

As for ads, can't you pay for DI?

I'm curious—is the music you were listening to on SC not available on Spotify, or not in the same amounts? Obviously there is a lot of new, original stuff on SC that's often not 'officially' released or distributed. But it would seem that, nonetheless, that's still not enough of a draw to build (enough of) a subscription service around it?

I think I could find stuff on Spotify, but I have a feed on SC and the handful of artists (mostly independent) post stuff daily. On Spotify you listen to songs from "official" albums. Its a completely different feel IMO.

And no, for me a lot of the stuff I listen to is not on Spotify.

Right. Super interesting. This lends anecdotal creedence to my post on another comment: "I only listen to music that was made today" could be an amazing guiding principal for SoundCloud that differentiates it from Spotify et al.


Discovery and 'play related' are totally broken on Soundcloud compared to Spotify.

On SC, you can follow hundreds of users and get inspiration from them but for me this never worked or matched my taste in a consistent manner.

So either you listen always to the same tracks the eight hours or listen to some unrelated tracks or must fiddle around with SC's also broken UI.

If you've got Spotify try JQBX: https://www.jqbx.fm basically a tt.fm clone. Great for passive listening.

DI (digitally imported) does a pretty good job of filling my work-electronic-music fix.

Also check out Soma FM if you haven't already!

SomaFM is great. Been listening for over 10 years now. Groove Salad is my personal favorite "channel", but I really like Christmas Lounge during the holiday season.

If you're into lounge, exotica, and related genres, you might enjoy http://luxuriamusic.com. Its a online radio station with in-studio DJs and everything.

DAng... it seems like a nice service but it says "Flash Unavailable".

I thought everyone was moving to Flash alternatives nowadays?

Mhh it appears to need Adobe Flash though!


a shell script to ease playing music from Digitally Imported (DI.FM), SKY.FM, and JAZZRADIO.com Internet radio stations

http://somafm.com/ is another option

They used to provide standard MP3 streams. Not sure if they still do.

They still do, but you need to be a subscriber.

you can't replay mixes you like.

I agree. my collection of liked mixes on soundcloud is the perfect soundtrack for getting work done. I prefer to listen a song I like, specially electronic, in a dj mix than in a playlist.

Depending on your music preferences YT does a pretty good job at it, there are many more gems hidden on YT compared to all the other music services combined.


Edit: Tons of playlists. No vocals.

What role did Chance the Rapper play in this? When they were making chooses that they would shut down he reached out to the CEO personally, I know.

"This financing means SoundCloud remains strong, independent and here to stay.

Independent? I beg to differ...

I've been saying this for years, SoundCloud needs some way for artists to monetize directly through the platform that doesn't involve advertising. Add a "support this creator" button to every page and take a cut like YouTube does with its Super Chat feature. I think they really missed out on this opportunity. Look at all of the podcasts that host on SoundCloud but monetize with Patreon, for example.

...and all the indie musicians that monetize with Bandcamp.

It would be interesting if SoundCloud implemented a Patreon model, where you can pledge $1-$100/month to an artist you like, and SC takes a small cut.

This would have been the best expression of SoundCloud's DNA since the beginning, if they had not involved VCs and decided it was cool to try to become Spotify instead.

Or something Flattr like, where you put money in a pool and it gets split between everything you "liked" (or otherwise marked) during the month.

Can someone ELI5 how can a company raise a $169.5m at a valuation of $150m? How can they raise more than what the company is valued?

By giving away more than 50% of the equity.

pre-money valuation: $150M

investment : $169.5M

post-money valuation: $319.5M

So the investors got about 53% of the company for $169.5M.

So essentially the company doubled in value - the investers thought it was undervalued and were willing to pay the difference

No - the investors were willing to add $169.5M of value to the company by giving it $169.5M in cash.

The company is "worth" the same as it was before, plus $169.5M new cash in the bank.

In return, the investors received newly-issued shares at a price based in the pre-investment valuation of the company.

So there's no paying any "difference"; only increasing the valuation of the company by injecting new cash into it and creating new shares.

How much funding did they get and how much runway does hat provide?

I don't see it listed in either the TC article or any of the top level links.

170M. http://www.brooklynvegan.com/soundcloud-saved-by-170-million...

As for runway, hard to guess b/c the new CEO will presumably make some changes.

> I guess hard to guess b/c the new CEO will presumably make some changes

That and there are going to be some seriously restrictive terms to that money. Also I think part of it is used to pay debt.

Does it make sense to pour money to keep a sinking ship afloat?

Just like Twitter, if the service changes too much it might lose its only asset (the community) but if it doesn't change it will sink.

So SC will focus more on driving towards profitability now instead of growth. I wonder if SC will stagnate, or this cash infusion + new leadership will provide much needed stability.

To me it's weird, and very "bubbly" that someone would make an investment of this magnitude, at this stage, in a business that's proven as unsuccessful as SoundCloud. With this, and all the previously recieved/spent VC, do people investing like this actually expect to get their money back, and with profit? I can't wrap my head around that. strange times.

If they do go down, I sure am going to miss that creamy react / redux front end... Amazing work by those devs!

If you're talking about SoundCloud.com, actually a Backbone app :)

What?! Thanks for the insight!

As a future feature, it would be pretty awesome to have SC be some sort of free DAW, or tools to help the musician create tracks, rather than just hosting.

That would be a differentiator between them and uploading to youtube with a static image.

I can't see how keeping the co-founders on as Head of Product and Chairman respectively will help if the bad product decisions made (Soundcloud Go) were what basically brought Soundcloud down.

It's funny how German banks/VC's did not step up to make an investment in one of the most visible tech German companies. Instead a New York based firm and Singapore firm did.

Why would they? I think that would be a bit much money for most German VCs just to support a "trophy" startup.

I think they already lost most of the local support here with the layoffs. The VCs might even be happy that the talent that was tied up in SC is now on the free market and available to help build the next "big" startup.

I really don't like this. This looks like a death omen to me.

They will probably fire more employees, do 2 or 3 pivots to different business models and when that doesn't work out the company will die.

Bye bye free sc egress traffic.

Download your favourite content now, before that value lever has been pulled, and it's too late.

Here's one of their problems: Check out their advertising page (https://advertising.soundcloud.com/). You have to contact them if you want to advertise on their platform. You ought to be able to upload your 15-second ad, provide your credit card info, and starting running advertisements... $$$

Curation is probably a good thing if you want to retain users.

Is it possible to buy shares in soundcloud ?

This article would suit Washington Post better

Wow for an in-browser music player that almost always doesn't work I am totally not shocked it is dying.

Does SC have ads? Would ads completely destroy the appeal? Could they not do the same free tier things as Spotify where you're largely paying to remove ads? Obviously not at $10/month, but maybe a few bucks. Could they license their content to Spotify/etc for ad-free play rolled into your existing subscription service?

Yeah they introduced ads in the past few months. Already looking for alternatives that have some resemblance of my existing SC library because of it.

I will mourn the loss of SC as it has been a superior product to Spotify, but it's all about two things:

1. Does it have the music I listen to? 2. Is it obnoxiously in my face trying to make money while I'm trying to concentrate with background music?

Right now, they're starting to ruin criteria 2 and there isn't much reason to be loyal to the brand. The only problem for me now is, that whatever alternative I find is. Inevitably it will befall the same fate.

Does SC have ads? Would ads completely destroy the appeal? Could they not do the same free tier things as Spotify where you're largely paying to remove ads? Obviously not at $10/month, but maybe a few bucks.

That's what they tried (and failed with), yes. They added it pretty late, but the retargeting towards this model IMHO did a lot of damage.

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