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SoundCloud saved by emergency funding as CEO steps aside
- swampthinker 9y agoSo 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.
- deleted 9y ago[deleted]
- sillysaurus3 9y agoThis 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.
- tomphoolery 9y agoSoundcloud 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.
- jmreid 9y agoIt 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
- virgil_disgr4ce 9y agojmreid 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).
- nxsynonym 9y agoHonestly 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?
- virgil_disgr4ce 9y agoSame 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.
- dep_b 9y agoI 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.
- lucaspiller 9y agoFor 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.
- dave7 9y agoThank you for mentioning MixCloud, I was not familiar with it and from a quick browse it seems great for my tastes (EDM live sets).
- spacelizard 9y agoThe 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.
- smitherfield 9y agoI'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.
- myth_drannon 9y agoProgramming at work will not be same without SC. 8 hours per day of productivity boost.
- blawson 9y agoDI (digitally imported) does a pretty good job of filling my work-electronic-music fix.
- chrisper 9y agoMhh it appears to need Adobe Flash though!
- daxelrod 9y agoThey used to provide standard MP3 streams. Not sure if they still do.
- edp 9y agoThey still do, but you need to be a subscriber.
- j_s 9y agohttps://tukaani.org/difmplay/ https://tukaani.org/difmplay/ a shell script to ease playing music from Digitally Imported (DI.FM), SKY.FM, and JAZZRADIO.com Internet radio stations
- pmh 9y agohttp://somafm.com/ http://somafm.com/ is another option
- saganus 9y agoDAng... it seems like a nice service but it says "Flash Unavailable". I thought everyone was moving to Flash alternatives nowadays?
- myth_drannon 9y ago
- dpflan 9y agoDoes 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?
- shams93 9y agoI 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.
- jonathanjaeger 9y agoBandcamp 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.
- komali2 9y agoI 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?
- brandnewlow 9y agoKinda 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.
- bigbugbag 9y agoSo twitter is nothing but marketing and PR ? Why am I not surprised ?
- nihonde 9y agoYet 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.
- such_a_casual 9y agoIt's crazy that as far as we've come from limewire, internet music sources are still having problems staying alive. I still miss 8tracks.
- koolba 9y agoHow 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.
- adamnemecek 9y ago170M. http://www.brooklynvegan.com/soundcloud-saved-by-170-million-investment/ 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.
- mbesto 9y ago> 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.
- dpflan 9y agoProbably worthwhile to link this HN post of SC's own announcement: https://news.ycombinator.com/item?id=14991071 https://news.ycombinator.com/item?id=14991071
- BlackjackCF 9y agoOoooh 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.
- lavezzi 9y agoDon'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.
- triplesec 9y agowhat kind of things has it been doing to drive them away?
- devmunchies 9y agoWhere are the bedroom DJs and indies going now, then? I think soundcloud is still the place to be. I'm a daily user.
- jtmcmc 9y agomixcloud, bandcamp
- bigbugbag 9y agoThose who didn't leave soundcloud in 2014, left after the 2015 purge. Many went to mixcloud.
- devmunchies 9y agoI'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.
- Eridrus 9y agoDoes 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?
- Snowdax 9y agoYeah 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.
- detaro 9y agoDoes 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.
- pier25 9y agoDoes 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.
- rdiddly 9y ago"This financing means SoundCloud remains strong, independent and here to stay. Independent? I beg to differ...
- forkLding 9y agoCan'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.
- pmarreck 9y agoThey could, although there's a number of other players already in that space... https://www.audiomack.com/ https://www.audiomack.com/ comes to mind (but I know the lead developer)
- forkLding 9y agoIn 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.
- richardknop 9y agoI 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.
- whitepoplar 9y agoBusiness model: Unlimited free streaming with ads. Every artist has a "become a patron" button on their profile. Once you pledge over $10/month in aggregate, ads are removed. Soundcloud takes a 30% cut, like Apple does in the App Store. VIP patrons ($$$) get special perks as outlined by artists.
- WisNorCan 9y agoI 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.
- seizethecheese 9y ago> The new CEO is a Harvard Business School grad Yeah, they're toast.
- WisNorCan 9y agoThat 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.
- exogeny 9y agoI 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.
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- ovrdrv3 9y agoIf they do go down, I sure am going to miss that creamy react / redux front end... Amazing work by those devs!
- phillywiggins 9y agoIf you're talking about SoundCloud.com, actually a Backbone app :)
- ovrdrv3 9y agoWhat?! Thanks for the insight!
- artursapek 9y agoHow 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.
- revelation 9y agoReddit 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.
- pcsanwald 9y ago- 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.
- neerkumar 9y agoIt 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.
- artursapek 9y agoInteresting insights... thanks to you and parent. I have been thinking about this for a while. It feels very broken.
- bkanber 9y agoThe 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.
- submeta 9y agoWasn'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?
- bkanber 9y agoDilution 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.
- crispytx 9y agoHere's one of their problems: Check out their advertising page (https://advertising.soundcloud.com/ 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... $$$
- pbhjpbhj 9y agoCuration is probably a good thing if you want to retain users.
- dchichkov 9y agoSources 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.
- TallGuyShort 9y agoReminds 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.
- twunde 9y agoWell 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.
- hobofan 9y agoI'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.
- buryat 9y agoThis article would suit Washington Post better
- smegel 9y agoWow for an in-browser music player that almost always doesn't work I am totally not shocked it is dying.
- macrael 9y agoWhat 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.
- devmunchies 9y agoIt 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.
- hobo_mark 9y agoThis 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.
- detaro 9y agoOr something Flattr like, where you put money in a pool and it gets split between everything you "liked" (or otherwise marked) during the month.
- thinbeige 9y agoSlightly 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.
- Jdam 9y agoJust 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.
- supernintendo 9y agoI'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.
- hobo_mark 9y ago...and all the indie musicians that monetize with Bandcamp.
- exabrial 9y agoAs 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.
- nodesocket 9y agoIt'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.
- hobofan 9y agoWhy 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.
- beebmam 9y agoSoundcloud 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
- nodesocket 9y agoUmm 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.
- beebmam 9y agoWhy 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.
- icelancer 9y ago>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.
- KGIII 9y agoIn 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.
- lojack 9y ago
- _lol 9y agoCan 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?
- andruby 9y agoBy 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.
- cbcoutinho 9y agoSo essentially the company doubled in value - the investers thought it was undervalued and were willing to pay the difference
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- tomhoward 9y agoNo - 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.
- rakel_rakel 9y agoTo 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.
- ulfw 9y agoI 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.
- ionwake 9y agoIs it possible to buy shares in soundcloud ?
- unixhero 9y agoBye bye free sc egress traffic. Download your favourite content now, before that value lever has been pulled, and it's too late.