Big things are on the horizon for Soundcloud in 2015. Only one month after signing their first licensing deal with Warner Bros., the Berlin based audio sharing service is planning on raising around $150 million dollars in capital to bring the company’s estimated value to a whopping 1.2 billion dollars, according to the Wall Street Journal.
While this impending induction into the ‘Billion Dollar Startup Club’ is definitely a big step for the company; it’s just the beginning of a long and expensive game of catch up Soundcloud is going to have to play in order to compete with other more well established companies in the game.
While an increase in revenue might mean good things for the company, users are going to feel a bit of a backlash on their checkbooks. Right now, anyone can create a soundcloud account and upload 3 hours of original music free of charge. If you want more, you pay, and many people do. However, if you happen to just be a fan, or a broke artist, chances are you don’t pay for soundcloud. As this company gets bigger and gets more sponsors, this is no longer going to be an option. Soundcloud plans on launching a subscription service for listeners starting at the beginning of next year.
This is one of the many changes being considered for the site in the coming years in an attempt to entice deals with other major record labels such as Sony; who doesn’t want Soundcloud releasing their full songs, or allowing artists to post bootleg versions of them on the site, something that Soundcloud would like to keep. Issues like these have brought negotiations with some major labels to a standstill. However with the introduction of ads this year, soundcloud is now making money with around 60 smaller labels and artists (known as Premiere Partners), who are helping to raise the funds needed to help these issues with major companies “work themselves out”. This means users can expect a series of changes to the site, its content, and how it’s accessed in the next few years. It looks like soon we might have to go elsewhere for our big room festival trap remixes.
The Wall Street Journal on the topic of the subscription model:
Unlike standard, music-streaming services which charge listeners a monthly fee, SoundCloud has long relied on the creators for revenue, charging monthly subscription fees based on upload volume. This year, it began showing ads to listeners, and has plans to launch a subscription service for listeners beginning next year.
Warner Music is the only major label to have inked a licensing agreement with the service, signing up as one of SoundCloud’s “Premier Partners” this fall after SoundCloud promised to launch a paid subscription service next year. The deal allows both Warner Music and its publishing division to collect royalties for the songs they’ve opted to monetize on the site. Warner is also taking a small stake in the company.
Source: Wall Street Journal