SoundCloud, the platform for sounds, has had quite a rough few months starting around June. First they alienated large swathes of what appears to be their core user base with site changes. Then they entered into and are apparently failing at negotiations with major labels. Now it looks like they're losing more money than ever and will soon need more based on a new financial filing.
SoundCloud's incredibly weak response to creator turmoil in itself has raised a lot of questions. For my part I'm baffled.
Last week news emerged that talks with major labels were failing which is putting a stop to their monetization plans.
Now a new annual filing in the UK for 2013 reveals the biggest losses to date according to TechCrunch:
"Soundcloud posted turnover of €11.2 million ($14.1 million) in 2013, up 40% from 2012’s revenues of €8 million. But its operating loss in the period more than doubled, to €23.1 million ($29.2 million) in 2013 from €12.4 million in 2012."
SoundCloud explains in the filing:
"We are in a phase of growing SoundCloud into the market-leading platform for listening to, creating and sharing sound...This has necessitated investment in technology, headcount and marketing. Our overhead base has increased faster than our revenues."
Music Ally puts that in perspective:
"We’ve been digging back into SoundCloud’s financial results for previous years to get a sense of the company’s progression. SoundCloud’s revenues were €1.37m in 2010, €4.32m in 2011, €8.04m in 2012 and €11.28m in 2013."
"However, its net losses grew from €1.55m in 2010 to €3.74m in 2011, €12.43m in 2012 and €23.11m in 2013. Or, to put that another way, SoundCloud’s losses were 113% of its revenues in 2010, 87% in 2011, 155% in 2012 and 205% in 2013."
Yet as Music Ally also points out, these are financials from before two key events, the addition of advertising and the yet to be agreed upon deals with major labels.
Eventually we'll hear more about what's happening behind the scenes with label negotiations. Given that they've required an equity stake in companies like Spotify and that SoundCloud seems to have bet its future on negotiations succeeding, it must be a painful process, at least for SoundCloud.
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