SoundCloud responds to heavy 2014 losses: ‘[they] reflect those of a company in a strong growth stage’Soundcloud Founders

SoundCloud responds to heavy 2014 losses: ‘[they] reflect those of a company in a strong growth stage’

Earlier this week, SoundCloud unveiled their latest financial filings, which showcased a loss of $44 million in 2014. Music Business Worldwide reported the news, saying “SoundCloud losses show a broken business model in desperate need of a fix.” Some outlets even went as far to say that the new data suggests the impending end of the platform. FactMag, for instance, wrote, “SoundCloud could be forced to close after $44m losses.”

The reports seemed a bit hyperbolic, and thus we reached out to SoundCloud for a comment on the situation. A spokesperson from the platform responded:

“Beyond the full-year financials for 2014, which reflect those of a company in a strong growth stage, they show that, in 2015, we secured $77m of incremental capital, some of which came from our existing investors, demonstrating their belief in the future of the company, and the rest of which is a flexible credit line from Tennenbaum Capital Partners, an attractive option for companies like SoundCloud, who have a solid credit rating and are on a clear path to global success.”

It’s the kind of overly reassuring gesture you’d expect from an official statement, but it does provide a legitimate and well-founded response to the situation. It’s worth remembering that the company has been fighting an uphill battle against copyright laws and major labels over the past few years, and has only recently begun turning the tide by securing deals with PRS for MusicUniversal Music, Warner Music and more.

Ultimately, however, one thing is clear: SoundCloud needs to build a sustainable business model. Whether the answer rests in their forthcoming paid-subscription service remains to be seen. They ended their response on an optimistic note: “We’re focusing on enabling creators to get paid for their creativity, and on building a financially sustainable platform that our community can enjoy for years to come.”

Read their full statement below:

SoundCloud filed its 2014 accounts with Companies House. Beyond the full-year financials for 2014, which reflect those of a company in a strong growth stage, they show that, in 2015, we secured $77m of incremental capital, some of which came from our existing investors, demonstrating their belief in the future of the company, and the rest of which is a flexible credit line from Tennenbaum Capital Partners, an attractive option for companies like SoundCloud, who have a solid credit rating and are on a clear path to global success.

Since we began, we’ve been building a completely unique platform. SoundCloud users can discover more creators, at all stages of their careers, than anywhere else, and more music and audio: over 18 million creators are using the platform, sharing well over 110 million tracks, and reaching 175 million monthly active listeners. Additionally, comScore recently listed SoundCloud as being the 8th most popular app among millennials based on usage in the US.

Over the past year, we’ve continued to bring partners from the music industry onto SoundCloud. We’ve signed deals with PRS and UMG/UMPG, to add to the nearly 200 deals we’ve already signed, including those with Warner Music, Merlin and NMPA, as well as MCNs and independent creators. We’re focusing on enabling creators to get paid for their creativity, and on building a financially sustainable platform that our community can enjoy for years to come.

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