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Weiser-Schlesinger: SoundCloud releases financial reports that suggest potential bankruptcy

For years, music streaming platform SoundCloud has been the main way independent musicians could publish and share their work. But like so many once-promising music services, SoundCloud has fallen into a too-common trap. It doesn’t understand how to monetize music in the digital streaming era.

SoundCloud released financial reports last week revealing that the service lost $70 million in its last two years of operation, sparking widespread concerns about its future. The company says it needs a significant increase in outside funding in the next year to stay in business, according to a report released by the Financial Times.

Hoping to eventually become profitable, the company has spent the last two years trying to work out streaming deals with major music labels like Universal Music Group and Sony Music Entertainment. In doing so, though, they’ve abandoned the people that made them a big name in the first place — small-time artists hosting their music on the site.

SoundCloud has always been an anomaly in the music streaming environment, which is otherwise characterized by overwhelming label control and low profit margins for artists. Its mission — to provide up-and-coming artists a platform to get their names out in the public and build a profile — has been a noble one. But ultimately, it’s a cause set up for failure.

As I’ve always said, the music streaming environment is set up to favor big-name artists and the labels supporting them. It’s awfully hard to turn a profit without that system in place.



But SoundCloud met a different purpose in the music streaming community, achieving a reputation earned by its proven record in building followings for independent artists. Recent popular names in popular music like The Weeknd, Kygo, Major Lazer and Disclosure used their presences on SoundCloud to build fan bases across the world to get to where they are now.

It was when SoundCloud abandoned its “artists-first” mentality that it first showed signs of weakness.

When major labels started cutting deals with SoundCloud, they began demanding widespread takedowns of their music hosted on the site. This extended from illegitimate copies of copyrighted music hosted on SoundCloud to perfectly legitimate remixes, mashups and samples.

DJ sets, amateur hip-hop and remixes make up much of SoundCloud’s most popular content. All three of those categories have one thing in common — heavy reliance on music created by other artists, often with rights owned by major music labels.

Full disclosure: The one song I’ve ever published on SoundCloud, a fairly amateurish mashup I made of CHVRCHES and Miley Cyrus, was even taken down this past fall for copyright infringement.

This aggressive approach that protects the interests of record labels has, in turn, driven a lot of amateur artists away.

Without question, SoundCloud needed to find a way to make money in order to stay above water.

I won’t even begin to delve into the intricacies of music copyright law here. I barely understand it myself. But I think the clash between music labels and artists is the core of SoundCloud’s struggles. A platform for the artist can’t truly be “for” the artist anymore, as the interests of the music labels are dominating those of the artist.

Like the rest of the streaming community, the future of SoundCloud is a matter of “wait and see.” SoundCloud could very well fail, along with all the other upstart music streaming platforms without flashy record deals to show. Or, it could find a way to turn its downward spiral around. Without a direction, though, it’s dead in the water with the rest of them.

Brett Weiser-Schlesinger is a sophomore newspaper and online journalism major. His column appears weekly in Pulp. He can be reached at bweisers@syr.edu or by Twitter at @brettws.





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