SoundCloud wants to monetize with advertisements but NMPA may stand in their way
With 350 million monthly users under its belt, Soundcloud stands as the largest audio-streaming platform on the web to date. Taking advantage of milennials’ attraction to social media, Soundcloud based their business model on artist-to-fan interaction and has built an astounding user base. The audio-streaming startup is notorious for their strict copyright infringement policies — Kaskade most notably spoke out in the media — yet record labels are still unsatisfied. Soundcloud’s previous lack of advertisement has held off lawsuits by record labels in the past, but this won’t hold forever.
In 2007, YouTube went through a similar debacle that led them into a fierce legal battle with the National Music Publishers Association. NMPA president and chief executive, David Israelite, has already been in talks with Soundcloud’s executives but Israelite describes the situation as, “we may still look to sue them, but we’re in a conversation and looking for a win-win situation.” Soundcloud’s lack of advertisement seems to be playing a substantial roadblock for NMPA, but this inability to advertise keeps the platform financially in the red. Right now, Soundcloud’s primary goal has been to find a way to bring in revenue while simultaneously preserving their user base yet avoiding legal action.
Soundcloud’s executive team sees a light in the distance though. Bringing onboard Jeff Toig, former general manager of Muve Music, and former Warner Music Group digital executive Stephen Bryan, Soundcloud plans to strategically expand their market. MusicWatch managing partner Russ Crupnick explained that Soundcloud’s presence on the internet is so eminent that 10% of the US population on the Internet could recognize the site, and the core listener demographic is young males under 25. With only a small percentage of the market making up their listener base, Soundcloud sees a gold mine to expand as long as record labels and NMPA don’t drive the site into the ground first.