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SoundCloud posts significant 2013 losses

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The online music sharing platform SoundCloud has proven to be one of the great online musical success stories of the last few years, with an average of around 175 million users signing into the site to listen to and share their own music every month. Recent reports of its 2013 filings, however, tell a much bleaker story, with an operating loss of $29.2 million, more than double that of 2012, even with a $14.1 million turnover (up $6 million from the preceding year). The German startup, which has been valued at $700 million, is (according to the company) “In a phase of growing SoundCloud into the market-leading platform for listening to, creating and sharing sound,” and says “This has necessitated investment in technology, headcount and marketing,” which has resulted in their overheads base increasing faster than their revenues. Basically, their eyes were a little to big for their stomachs.

The German startup, which has been valued at $700 million, is “In a phase of growing SoundCloud into the market-leading platform for listening to, creating and sharing sound.”

This all begs the question; how is the company still operating? Well this is undoubtedly down to the $123 million worth of funding and the unspecified amount gifted the Berlin-based company by the German Startups Group. The way in which the company is operating, however, means that as they gain more users they are losing more and more revenue, and with the current rate of growth they are really going to need to start monetising their services.

SoundCloud – Join Us At SoundCloud

SoundCloud have already made a few tentative steps in that director, with the launch of an ad platform earlier this year (featuring advertisers such as Red Bull, Jaguar and Comedy Central) and a new strategy for premium subscriptions. It's also been reported that the company has been in discussions with major labels, but those discussions appear to have stalled for now. A person involved with one of the three major labels (Sony, Warner Bros and Universal) said “The clock is ticking on how long they can continue operating as a service that’s unmonetised.”

It's also been reported that the company has been in discussions with major labels, but those discussions appear to have stalled for now

A spokesperson for SoundCloud has also admitted that “Typical internet users use about four to five different music and audio services during a month,” calling out strong competitors such as “YouTube, Apple and Amazon as well as new more focused players.” The statement goes on to say that, in going forward, whilst SoundCloud doesn't “Expect the market to be a winner takes all opportunity, there are economies of scale and technology developments that need to be monitored closely.” Whatever the case, with the number of competitors in the field constantly increasing, SoundCloud will need to find a solution if they wish to remain afloat.

Official SoundCloud Website

Benjamin Hiorns is a freelance writer and musician from Kidderminster in the UK. He is also a committed SoundCloud fan, so really hopes they can pull it back from the brink!

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