Trouble At SoundCloud? They Just Laid Off 173 Employees and Closed Two Offices
Streaming service's future looking cloudy
SoundCloud, the website used for years by underground artists, including everyone from Lorde to Matt Ox, appears to be looking at some rough financial times. Yesterday the company announced that it would be laying off 173 of its 420 employees and that they would be closing their offices in San Francisco and London. Alexander Ljung, the company’s chief executive and co-founder, wrote in a blog post:
In the competitive world of music streaming, we’ve spent the last several years growing our business, and more than doubled our revenue in the last 12 months alone. However, we need to ensure our path to long-term, independent success. And in order to do this, it requires cost cutting, continued growth of our existing advertising and subscription revenue streams, and a relentless focus on our unique competitive advantage — artists and creators.
With more focus and a need to think about the long term, comes tough decisions. Today, after careful and painful consideration, we took the difficult step to let go of 173 SoundCloud staffers and consolidated the team into two offices: Berlin and New York. We are extremely grateful for the contributions of each and every staff member who will be leaving SoundCloud, and we wish all of them the best. Without them, we would not be where we are today.
By reducing our costs and continuing our revenue growth, we’re on our path to profitability and in control of SoundCloud’s independent future.
The company tried to rollout a subscription service but that didn’t seem to be going well. The monthly price of $9.99 seemed like a bit much. Then SoundCloud got hit with another blow when Sony Music announced they were pulling their entire catalog. When that happened, speculations began circulating that the demise of SoundCloud was inevitable. There were talks of a acquisition by Spotify, but that fell through. The company hasn’t reported the number of SoundCloud users, but analysts believe that it’s much lower than the 175 million SoundCloud said were using the streaming servcie three years ago. The company also announced last year that they were having financial issues and got a $70 million line of credit to help float them along. With Apple Music, Amazon Prime and Spotify all killing the subscription market and record label partnerships, it’s hard to say where SoundCloud will fit into the mix of online streaming services. There’s also Tidal, but that’s a whole other conversation.