SoundCloud is an audio streaming service founded in Sweden and headquartered in Germany. The company is owned and operated by SoundCloud Global Limited & Co. KG. SoundCloud will be listed for sale in 2024. The streaming platform’s owners expect to secure $1 billion in any prospective deal.
SoundCloud, founded in 2007, was on the verge of closure in 2017 until Raine Group and Temasek invested $170 million. In 2020, SiriusXM purchased a minority stake with $75 million in funding.
Last year, the business laid off 8% of its employees or approximately 40 workers. In a statement to employees, CEO Eliah Seton defined the move as “a difficult but necessary decision to maintain the health of our business and get SoundCloud profitable this year.” This article explains more about the layoffs at SoundCloud.
What happened to SoundCloud?
SoundCloud was a wild child in the streaming industry in the 2010s. The company has spent the last few years rebranding itself as a more official streaming service.
In March 2021, the company made the unusual move of launching “fan-powered royalties.” A listener’s subscription or advertising-income is distributed among the artists they listen to rather than being put into a collective pool.
This music streaming platform has previously laid off employees. The company laid off 40% of its employees and closed its offices in San Francisco and London during its initial shift in 2017 from a free service to a legitimate subscription business.
On August 3, 2022, Billboard released extracts from SoundCloud CEO Michael Weissman’s email to workers. The email informed them of the planned layoffs. The email described all of the changes made to the company as “the driving force.” It would allow the brand to “focus on its goal to lead what is next in music.” Also, Weissman’s email stated that affected employees in the United States and United Kingdom “will be informed over the next few days.”
SoundCloud Layoffs
According to several sources, SoundCloud, a music streaming business, laid off 8% of its workforce in May 2023. This round of layoffs follows the company’s firing of 20% of its workforce in August 2022.
According to a statement given to employees, CEO Eliah Seton stated that SoundCloud is reducing jobs to become profitable.
“This is a difficult but necessary decision to maintain the health of our business and bring SoundCloud into profitability this year. In doing so, we safeguard the company’s future for millions of artists. They depend on us for a living and self-expression. It is also for the millions of fans who visit SoundCloud for their love of music,” the CEO stated.
Seton wrote, “In the end, I accept responsibility for this choice and will cope with that every day.” “Most importantly, we have decided to treat everybody with the greatest dignity. Also, we will manage this process in the most kind way possible.”
“It is essential to ensure that SoundCloud flourishes in our mission to influence culture. It is also to be the preeminent home for artists and fans and to drive what is next in music,” he added.
This was Seton’s first big move after becoming CEO in March 2023. He replaced the former CEO, Michael Weissman. SoundCloud has widened its fan-powered royalty scheme in recent years. It partnered with several labels, like Merlin and Warner Music Group. The project distributes commercial and subscription revenue to the artists that consumers listen to.
It offers a more extensive royalty program compared to other streaming providers. In 2022, the startup unveiled a vertical stream similar to TikTok for finding music. In April 2023, SoundCloud introduced a fan interaction tool to help musicians gain more insight and interact with their fan base.
SoundCloud claims to have 130 million “engaged fans.” As of 2023, it had over 320 million tracks from over 40 million producers.
Music streaming firms are facing challenges as they strive to become profitable. In 2022, Tencent-backed Indian app Gaana moved to a subscription-based model. ByteDance’s Resso app, available in India, Brazil, and Indonesia, followed suit and slid behind the paywall earlier.
SoundCloud is seeking profitability
According to sources close to SoundCloud’s investors, the company’s existing shareholders include SiriusXM and Raine Group. It was in the early stages of considering a potential investment event in 2023 or a sale within 2024.
This move by the company is said to speed up its journey to profitability. Also, it would undoubtedly fit with that concept.
In Q1 2020, SiriusXM acquired a minority stake in SoundCloud for $75 million. Coincidentally, SiriusXM eliminated 8% of its global workforce in a round of layoffs in 2023.
Conclusion
The growing popularity of SoundCloud Rap and the power of new artists to develop recognition helped SoundCloud gain enough users to stay in business. Like other streaming platforms, SoundCloud is an interactive platform that allows artists to achieve fame.
Finally, on January 8, 2024, SoundCloud was listed for sale for $1 billion. Raine Group and Temasek Holdings are two significant SoundCloud shareholders. They are said to be interviewing investment banks “about a possible auction of the company.” A source said that any potential sale is unlikely to occur quickly but later in 2024.