SoundCloud’s revenue soars past $100 million mark, but is it enough?
SoundCloud’s 2017 revenues have dramatically increased, but despite the financial gains made by the music streaming service, SoundCloud isn’t out of the woods just yet.
After facing what then appeared to be imminent bankruptcy last year, SoundCloud has made strides in the economic arena, exceeding its financial and user growth targets. SoundCloud has additionally surpassed its revenue goal of $100 million, less than a year after angel investors, The Raine Group and Temasek Holdings, saved the platform in a $150-million-dollar joint redemptive investment, one that notably secured a controlling stake in SoundCloud for The Raine Group and Temasek Holdings. SoundCloud “has never been healthier financially,” says CEO Kerry Trainor.
Trainor’s involvement with the company has led SoundCloud to depart from a business strategy that imitates Spotify’s model, to instead aggrandize its market of up-and-coming music producers. SoundCloud now markets music creation tools to its independent content creators for $70-100 a year, a move that initiates a positive feedback loop in which artists purchase the tools to generate content that they then post on SoundCloud, thus attracting listeners to the streaming service, and motivating artists to continue to purchase the tools from SoundCloud as their listener counts soar.
SoundCloud has and continues to execute a fiscal comeback that aims to situate financial woes permanently in the past, but the platform’s long-term sustainability will remain in question if the company does not devise a formidable plan of monetary attack for the future. SoundCloud’s subscription streaming service, SoundCloud Go, for instance, remains only in its nascent stages, and has yet to gain popularity among listeners.
Managing Director of Midia Research, Mark Mulligan localizes SoundCloud’s most attractive prospect for economic endurance in a later acquisition, preferably by Spotify. Although Spotify retreated from a potential acquisition of SoundCloud two years ago, Trainor seems also to share Mulligan’s view that an acquisition would be the best route for SoundCloud. Trainor has said that SoundCloud “will potentially be of interest [to suitors]” in the years to come, assuming, of course, that SoundCloud can maintain its current momentum.
H/T: Digital Music News