14 ms·

SoundCloud Raises $60 Million at $700 Million Valuation

161 points by aritraghosh007 13y ago

Keyframe 13y ago
Wonderful! Anyone knows how they have tackled possible copyright issues? I know youtube had serious trouble with it and, if I remember correctly, google forks over lots of money each year to keep the lawsuits away. How could a startup which isn't big as google mitigate that?
- jurre 13y ago
  There's much less of a culture of posting other peoples work on soundcloud, it's much more focused on letting artists share their own work.
  - kristiandupont 13y ago
    You might be right in terms of proportions, I don't know but there is plenty of copyrighted material on Soundcloud not belonging to the poster.
    - 001sky 13y ago
      This only really matters in the context of such postings not being helpful to the artists.
      - michaelt 13y ago
        Having a track sampled in a remix or mashup might seem good for the original artist, but that doesn't mean their record label won't try to shake SoundCloud down for cash. Especially if soundcloud start making money (and why else would VCs have invested?).
        001sky 13y ago
        This is certainly true; at some stage soundcloud though has the potential to be the label, though. Or in other words, to be the distrtibution channel as there is no/limited physical need to press records, when DJs are downloading the tracks. With this in mind, your point still stands, but the role of the label being more of a marketer is its highest value added service. And in that role, it would seem they would want to encourage promotion of the tracks. The open issue is the monetization of that scale by the two parties, who gets what cut. And that is going to continue to be fought over...regardless of who owns/controls the copyright...as that will also be in flux going fwd imho. But we shall see....
  - Keyframe 13y ago
    Quick search yielded numerous copyright infringements. Not even remixes, plain pirate material. So I am wondering how does it work on business side, how do you defend from it? Same question would be appropriate for imgur too. How can you shield yourself from it if you're a small startup with no cash? You wait for legal papers to flow your general direction and hope for a deal?
    - return0 13y ago
      There's a copyright infringement form if you are interested. Soundcloud is not usually used as a free music service, (although most creators allow free downloads), it's mostly about discovering and collaborating. Even if they removed all infringing content, my feed would be barely less interesting.
    - lotso 13y ago
      DMCA safe harbor is usually enough to protect you http://en.wikipedia.org/wiki/Digital_Millennium_Copyright_Act#Viacom_Inc._v._YouTube.2C_Google_Inc http://en.wikipedia.org/wiki/Digital_Millennium_Copyright_Ac....
- NoodleIncident 13y ago
  To add to what others have said, there's no real point in posting copyrighted content. No ad revenue, it's hard to search for, and the free tier has limited storage space to do so. The people who pay for SoundCloud pay for it because it makes them money, and the only way to make money like that is to have something worth selling (your own stuff).
- texel 13y ago
  They've got fairly aggressive automated systems for identifying and flagging material that's registered with rights-management agencies. It works for both individual tracks and material featured in mixes. I've even had my own music taken down preemptively before since the label had already registered the forthcoming track. I was able to fill out a form with some personal info and they put it back up pretty quickly, but it was still annoying (though I completely understand why they have it set up that way). Not sure how other people are confounding the detection algorithms. They're even resilient to changes in pitch. As a result, a lot of DJs I know can no longer post mixes to soundcloud and have to use other means.
CSDude 13y ago
Off-topic but it is blocked in Turkey as it contains a phone recording of PM about a corruption. Such a succesful company, is blocked in 4 hours without a warrant. Anyways, happy to hear the news, I know many friends using it here to share their songs or productions. https://soundcloud.com/haramzadeler https://soundcloud.com/haramzadeler (in Turkish)
- ddorian43 13y ago
  PrimeMinister? So they just block it and everything goes on?
  - justincormack 13y ago
    Well no, thats not the only thing they have done to obstruct the corruption enquiry, they also sacked/redeployed many of the people investigating it, police etc.
    - ddorian43 13y ago
      Cool. In Albania, the vice-primeminister, resigned, went to court and the video+audio was reported "FAKE" (the court sad we don't need external(offered by USA) experts, he was also recorded saying he was friends with the judge of his case). He is now in power again with the party that was in opposition when he was accused.
deleted 13y ago
[deleted]
k-mcgrady 13y ago
I've been using SoundCloud for several years. It's a great service and they have a decent business model. They're actually charging for useful things (stats, storage) meaning the don't need to shove ads down our throats. If they start going down the road of licensing content I'm not sure exactly how that will change the service. Will they start running ads? I hope not. If they start licensing large amounts of music they will just become another streaming service. At the minute they have a good thing going. They are a good place for artists to upload promos, demos, mixes etc. and I hope that doesn't change.
jordhy 13y ago
This sounds (no pun intended) as a very reasonable valuation for SoundCloud. They are doing a great job and deserve every penny of those 60M.
- return0 13y ago
  To be more precise, in the current climate, it's undervalued.
thisiswrong 13y ago
SoundCloud is great. You really get the feeling that you're being empowered as a content consumer and creator. This is because SoundCloud really doesn't give a shit about the making people listen to what the copyright monopoly wants people to listen to (ie J Bieber/M Cyrus). YouTube is the complete opposite. You log onto Youtube and it feels like MTV all over again. SoundCloud will become HUGE for this ability to empower its users in a way that no other streaming platform has done before. But as VC money flows into SoundCloud it will become crappy like YouTube, Deezer, Skype, Tumblr, and most other start-ups that end-up loosing the original spirit of their founders.
- blisterpeanuts 13y ago
  Youtube has become very commercialized, true, but you can still use it exactly like SoundCloud, can you not? Just ignore the ads and recommendations and it's basically the same experience. Although, it does seem like SC is a cleaner, more targeted audio platform.
  - mcormier 13y ago
    YouTube is good for previewing but the audio quality is horrible. 128 and the algorithm for compression makes a lot of things sound washed out.
    - JonnieCache 13y ago
      As I mentioned below, SC is limited to 128 mp3. Put youtube in 720p and the audio is decent-bitrate AAC, pretty much transparent. This is SC's most glaring and easily-fixed problem. The low quality is actually a boon to established artists, it gives people an incentive to buy the record rather than streaming it again and again. For unknown people trying to promote their sound, not so much.
    - boyaka 13y ago
      Part of the problem is Google's stinginess over bandwidth. They keep hiding the stream quality option more and more (referring to Google Play Music as well as Youtube) and they are literally RUINING the music. I've had to put HOURS of manual effort into changing stream quality on Google's products.
JonnieCache 13y ago
My favourite internet company. As soon as it came out, it was clear that it was going to be a big deal. Pretty much every electronic musician I know dumped myspace like a hot potato and eagerly started using SC. The punks took a little longer, but they're there as well now. All the decisions they've made since then have kept it on the right path. I've said it here before, I think their strategy of keeping souncloud.com itself aimed solely at creators, and having consumers come in through other sites via the API, is genius. If the new VCs try and dissuade them from this, I will be very sad. At least try and make any new discovery/listening features a separate app on a separate domain, please? "content deals with major music labels" sets alarm bells ringing for me. (Of course the cleverest part was their decision to actually accept substantial amounts of money from their users :) EDIT: also can you use some of that money to up the streams from 128 mp3? at least ogg or something? my tunes (link in profile ;) which I spend so long mixing sound super-watery on there, which is a shame because that's the main way people listen to them at this point.
- ams6110 13y ago
  The other interesting angle you mentioned is how myspace managed to lose the last niche of users they had, musicians. I guess at that point nobody was really minding the store there, if they ever were.
- return0 13y ago
  What i don't understand is why they haven't implemented a "buy song" or at least "tip the artist" a-la flattr. I don't think it would degrade the experience and would remove the hassle of setting up a separate bandcamp/whatever page.
  - JonnieCache 13y ago
    They have that. You can fill in any url as the "buy link" and it gets linked as "buy this track" or whatever, at the bottom of the player, next to the download link. Seems like kind of a stopgap, I imagine it was something users really wanted and this was a way to do it with almost no engineering effort. Maybe an actual retail section is part of their plans...
strict9 13y ago
SoundCloud is on my top 5 sites that I use on a daily basis, there really is no comparison for someone who listens to electronic music. The sad thing is that their only focus is on creators (subscribers). Customers who only listen to music routinely get the shaft via shoddy quality assurance and lack of discovery features. Playback, search, browse, and discovery in general routinely fail to load ("Something went wrong. Retry?"). Playing and finding music on their platform shouldn't be such a buggy experience given how long they've been around.
- mercer 13y ago
  I heard SoundCloud's codebase is quite a mess (on Rails 2, I think). Maybe they need to do some refactoring/updating...
nathancahill 13y ago
Interesting. I've been using a more performant/minimalist version of SoundCloud called SoundRad[1]. It lets you ditch the slow interface and just listen to music. Hopefully they'll spend some of the $60M on improving frontend performance. [1] http://soundrad.com/ http://soundrad.com/
- deletes 13y ago
  Their interface has some nice features, like stopping music in a different tab if you start playing in another. The gui is nice as well. Unfortunately it loads too slow, and just playing the music maxes out a cpu core and even a part of my gpu on my modern machine. For example playing video on youtube with hd and fullscreen, uses about a third of resources soundcloud uses.
  - deletes 13y ago
    My comments were completely regarding SoundCloud, which is Very slow. Haven't yet tried soundrad, I will if get to use SoundCloud enough.
ulfw 13y ago
Awesome. Congrats to the wonderful SoundCloud team. Gut für Berlin!
sakopov 13y ago
For the first time in a very long time I can say that this valuation is very reasonable.
nodesocket 13y ago
Love SoundCloud, literally spend 8-10 hours a day on it. Such a gold mine for electronic dance music.
Freestyler_3 13y ago
I must say I am one of those listening only users. I like the like system and the stream it creates. Only downside is since they updated their website it doesn't seem to work smooth on opera anymore. I use the site a lot less after that, since I will have to boot up firefox. I like how the music of today is becoming more eclectic, less taboos on what genre you can and cant mix. And I get new music from soundcloud, youtube searching/discovering was never my thing but on soundcloud its easier.
hyperlexic 13y ago
Cool site, but $700MM?
dyno12345 13y ago
Most of the engineering positions are in Germany apparently?
iusable 13y ago
Congratulations to Alex, Eric and the team! Great software, solid team and a really useful service. In the current climate, this is surprisingly undervalued at $700mn. One of those 'penalties' for being based out of the States, I guess.

161 points by aritraghosh007 13y ago

Wonderful! Anyone knows how they have tackled possible copyright issues? I know youtube had serious trouble with it and, if I remember correctly, google forks over lots of money each year to keep the lawsuits away. How could a startup which isn't big as google mitigate that?

jurre 13y ago
There's much less of a culture of posting other peoples work on soundcloud, it's much more focused on letting artists share their own work.
- kristiandupont 13y ago
  You might be right in terms of proportions, I don't know but there is plenty of copyrighted material on Soundcloud not belonging to the poster.
  - 001sky 13y ago
    This only really matters in the context of such postings not being helpful to the artists.
    - michaelt 13y ago
      Having a track sampled in a remix or mashup might seem good for the original artist, but that doesn't mean their record label won't try to shake SoundCloud down for cash. Especially if soundcloud start making money (and why else would VCs have invested?).
      - 001sky 13y ago
        This is certainly true; at some stage soundcloud though has the potential to be the label, though. Or in other words, to be the distrtibution channel as there is no/limited physical need to press records, when DJs are downloading the tracks. With this in mind, your point still stands, but the role of the label being more of a marketer is its highest value added service. And in that role, it would seem they would want to encourage promotion of the tracks. The open issue is the monetization of that scale by the two parties, who gets what cut. And that is going to continue to be fought over...regardless of who owns/controls the copyright...as that will also be in flux going fwd imho. But we shall see....
- Keyframe 13y ago
  Quick search yielded numerous copyright infringements. Not even remixes, plain pirate material. So I am wondering how does it work on business side, how do you defend from it? Same question would be appropriate for imgur too. How can you shield yourself from it if you're a small startup with no cash? You wait for legal papers to flow your general direction and hope for a deal?
  - return0 13y ago
    There's a copyright infringement form if you are interested. Soundcloud is not usually used as a free music service, (although most creators allow free downloads), it's mostly about discovering and collaborating. Even if they removed all infringing content, my feed would be barely less interesting.
  - lotso 13y ago
    DMCA safe harbor is usually enough to protect you http://en.wikipedia.org/wiki/Digital_Millennium_Copyright_Act#Viacom_Inc._v._YouTube.2C_Google_Inc http://en.wikipedia.org/wiki/Digital_Millennium_Copyright_Ac....
NoodleIncident 13y ago
To add to what others have said, there's no real point in posting copyrighted content. No ad revenue, it's hard to search for, and the free tier has limited storage space to do so. The people who pay for SoundCloud pay for it because it makes them money, and the only way to make money like that is to have something worth selling (your own stuff).
texel 13y ago
They've got fairly aggressive automated systems for identifying and flagging material that's registered with rights-management agencies. It works for both individual tracks and material featured in mixes. I've even had my own music taken down preemptively before since the label had already registered the forthcoming track. I was able to fill out a form with some personal info and they put it back up pretty quickly, but it was still annoying (though I completely understand why they have it set up that way). Not sure how other people are confounding the detection algorithms. They're even resilient to changes in pitch. As a result, a lot of DJs I know can no longer post mixes to soundcloud and have to use other means.

CSDude 13y ago

Off-topic but it is blocked in Turkey as it contains a phone recording of PM about a corruption. Such a succesful company, is blocked in 4 hours without a warrant. Anyways, happy to hear the news, I know many friends using it here to share their songs or productions. https://soundcloud.com/haramzadeler https://soundcloud.com/haramzadeler (in Turkish)

ddorian43 13y ago
PrimeMinister? So they just block it and everything goes on?
- justincormack 13y ago
  Well no, thats not the only thing they have done to obstruct the corruption enquiry, they also sacked/redeployed many of the people investigating it, police etc.
  - ddorian43 13y ago
    Cool. In Albania, the vice-primeminister, resigned, went to court and the video+audio was reported "FAKE" (the court sad we don't need external(offered by USA) experts, he was also recorded saying he was friends with the judge of his case). He is now in power again with the party that was in opposition when he was accused.

deleted 13y ago

[deleted]

k-mcgrady 13y ago

I've been using SoundCloud for several years. It's a great service and they have a decent business model. They're actually charging for useful things (stats, storage) meaning the don't need to shove ads down our throats. If they start going down the road of licensing content I'm not sure exactly how that will change the service. Will they start running ads? I hope not. If they start licensing large amounts of music they will just become another streaming service. At the minute they have a good thing going. They are a good place for artists to upload promos, demos, mixes etc. and I hope that doesn't change.

jordhy 13y ago

This sounds (no pun intended) as a very reasonable valuation for SoundCloud. They are doing a great job and deserve every penny of those 60M.

return0 13y ago
To be more precise, in the current climate, it's undervalued.

thisiswrong 13y ago

SoundCloud is great. You really get the feeling that you're being empowered as a content consumer and creator. This is because SoundCloud really doesn't give a shit about the making people listen to what the copyright monopoly wants people to listen to (ie J Bieber/M Cyrus). YouTube is the complete opposite. You log onto Youtube and it feels like MTV all over again. SoundCloud will become HUGE for this ability to empower its users in a way that no other streaming platform has done before. But as VC money flows into SoundCloud it will become crappy like YouTube, Deezer, Skype, Tumblr, and most other start-ups that end-up loosing the original spirit of their founders.

blisterpeanuts 13y ago
Youtube has become very commercialized, true, but you can still use it exactly like SoundCloud, can you not? Just ignore the ads and recommendations and it's basically the same experience. Although, it does seem like SC is a cleaner, more targeted audio platform.
- mcormier 13y ago
  YouTube is good for previewing but the audio quality is horrible. 128 and the algorithm for compression makes a lot of things sound washed out.
  - JonnieCache 13y ago
    As I mentioned below, SC is limited to 128 mp3. Put youtube in 720p and the audio is decent-bitrate AAC, pretty much transparent. This is SC's most glaring and easily-fixed problem. The low quality is actually a boon to established artists, it gives people an incentive to buy the record rather than streaming it again and again. For unknown people trying to promote their sound, not so much.
  - boyaka 13y ago
    Part of the problem is Google's stinginess over bandwidth. They keep hiding the stream quality option more and more (referring to Google Play Music as well as Youtube) and they are literally RUINING the music. I've had to put HOURS of manual effort into changing stream quality on Google's products.

JonnieCache 13y ago

My favourite internet company. As soon as it came out, it was clear that it was going to be a big deal. Pretty much every electronic musician I know dumped myspace like a hot potato and eagerly started using SC. The punks took a little longer, but they're there as well now. All the decisions they've made since then have kept it on the right path. I've said it here before, I think their strategy of keeping souncloud.com itself aimed solely at creators, and having consumers come in through other sites via the API, is genius. If the new VCs try and dissuade them from this, I will be very sad. At least try and make any new discovery/listening features a separate app on a separate domain, please? "content deals with major music labels" sets alarm bells ringing for me. (Of course the cleverest part was their decision to actually accept substantial amounts of money from their users :) EDIT: also can you use some of that money to up the streams from 128 mp3? at least ogg or something? my tunes (link in profile ;) which I spend so long mixing sound super-watery on there, which is a shame because that's the main way people listen to them at this point.

ams6110 13y ago
The other interesting angle you mentioned is how myspace managed to lose the last niche of users they had, musicians. I guess at that point nobody was really minding the store there, if they ever were.
return0 13y ago
What i don't understand is why they haven't implemented a "buy song" or at least "tip the artist" a-la flattr. I don't think it would degrade the experience and would remove the hassle of setting up a separate bandcamp/whatever page.
- JonnieCache 13y ago
  They have that. You can fill in any url as the "buy link" and it gets linked as "buy this track" or whatever, at the bottom of the player, next to the download link. Seems like kind of a stopgap, I imagine it was something users really wanted and this was a way to do it with almost no engineering effort. Maybe an actual retail section is part of their plans...

strict9 13y ago

SoundCloud is on my top 5 sites that I use on a daily basis, there really is no comparison for someone who listens to electronic music. The sad thing is that their only focus is on creators (subscribers). Customers who only listen to music routinely get the shaft via shoddy quality assurance and lack of discovery features. Playback, search, browse, and discovery in general routinely fail to load ("Something went wrong. Retry?"). Playing and finding music on their platform shouldn't be such a buggy experience given how long they've been around.

mercer 13y ago
I heard SoundCloud's codebase is quite a mess (on Rails 2, I think). Maybe they need to do some refactoring/updating...

nathancahill 13y ago

Interesting. I've been using a more performant/minimalist version of SoundCloud called SoundRad[1]. It lets you ditch the slow interface and just listen to music. Hopefully they'll spend some of the $60M on improving frontend performance. [1] http://soundrad.com/ http://soundrad.com/

deletes 13y ago
Their interface has some nice features, like stopping music in a different tab if you start playing in another. The gui is nice as well. Unfortunately it loads too slow, and just playing the music maxes out a cpu core and even a part of my gpu on my modern machine. For example playing video on youtube with hd and fullscreen, uses about a third of resources soundcloud uses.
- deletes 13y ago
  My comments were completely regarding SoundCloud, which is Very slow. Haven't yet tried soundrad, I will if get to use SoundCloud enough.

ulfw 13y ago

Awesome. Congrats to the wonderful SoundCloud team. Gut für Berlin!

sakopov 13y ago

For the first time in a very long time I can say that this valuation is very reasonable.

nodesocket 13y ago

Love SoundCloud, literally spend 8-10 hours a day on it. Such a gold mine for electronic dance music.

Freestyler_3 13y ago

I must say I am one of those listening only users. I like the like system and the stream it creates. Only downside is since they updated their website it doesn't seem to work smooth on opera anymore. I use the site a lot less after that, since I will have to boot up firefox. I like how the music of today is becoming more eclectic, less taboos on what genre you can and cant mix. And I get new music from soundcloud, youtube searching/discovering was never my thing but on soundcloud its easier.

hyperlexic 13y ago

Cool site, but $700MM?

dyno12345 13y ago

Most of the engineering positions are in Germany apparently?

iusable 13y ago

Congratulations to Alex, Eric and the team! Great software, solid team and a really useful service. In the current climate, this is surprisingly undervalued at $700mn. One of those 'penalties' for being based out of the States, I guess.