Today's news that two equity firms are close to investing in SoundCloud comes just days after the music streamer laid off 40% of its staff, and multiple leaks revealed a startup quickly running out of cash.
The downward spiral has begun for SoundCloud. But is it reversible?
It is hard to imagine that, after weeks of bad news, SoundCloud is not paying dearly for any new infusion of funds. And while the company recently claimed incremental revenue increases, it is unclear how it plans to become a profitable company in the near future.
Virtually no streaming music service has gotten anywhere close to being profitable; and on top of that, SoundCloud has its own unique challenges
A major bi-product of all of this uncertainty has been growing unrest within the SoundCloud artists community. These creators put SoundCloud on the map; and now a number of prominent artists are speaking out against the service. Many of them used SoundCloud to build their careers, but now they are railing against the music streamer, citing issues ranging from a music sharing system that they say led to aggressive phony marketing to low payments that have not trickled down at all to newer creators.
None of these problems are easy to fix, particularly when you are losing money.
CEO Ljung To Step Down?
A Buzzfeed report suggests that investors are insisting that founder and CEO Alexander Ljung step down as a condition of their involvement. But would even a new CEO and some fresh cash be enough to both placate unhappy creators and turn SoundCloud profitable?
For nowm most creators are sticking with SoundCloud for lack of an alternative. But if Spotify, Apple Music or perhaps Google were to create a SoundCloud competitor that serves these creators, all bets are off.