14 DAY TRIAL // SoundCloud's 2014 financial report has just come out, and the company is a few mistakes away from having to shut down due to huge losses over the past few years, Music Business World reports.
The situation looks bleak for the German startup, with the company reporting that, in 2014, its business lost $44.19 million (€39.14 million). This sum that goes up to around $85 million (€75 million) if we add up the last three years, for which full financial reports are also available (2012, 2013, 2014).
These are total net losses, which means that total costs are even higher if we take into account the revenue that SoundCloud reported during the same period. The company said it made $15.37 million (€17.35 million) in 2014 and $42 million (€37 million) in the 2012-2014 period.
Company continued to grow despite all these losses
Despite mounting losses, the company continued to expand, and in 2014, SoundCloud also hired more people, growing its employee base 21% while also increasing expenditures on salaries 42.5%, to a grand total of $20.2 million (€17.9 million).
The company foresaw problems with its business model in 2014, when it raised more funds in a Series D funding round, taking in an additional $60 million (€53 million), and then in 2015, when it raised another $77 million (€68 million).
SoundCloud hopes its upcoming subscription plans would save the service
During the past year, SoundCloud also tried to remediate its situation by speeding up its plan to roll out a subscription service, and also expanding its on-site advertising presence.
Additionally, they also (finally) negotiated a contract with Universal Music Group and also closed a lawsuit from Britain's PRS for Music.
But in spite of all the moves the music social network service is currently orchestrating, it will all be in vain if it can't keep its musicians on the site. There is already a bad mojo surrounding SoundCloud's name amongst musicians, who have been starting to flock to other services like Bandcamp and Mixcloud.
This is generally true for smaller independent music makers (bedroom producers), who made SoundCloud what it is today, and who have found more freedom and even revenue streams via competing sites.
In spite of its huge popularity with users, it appears that SoundCloud has failed to find a way to monetize its service, or at least until now. If the company's upcoming subscription plan fails to attract the much-needed revenue stream to keep the company alive, it may be time to move your playlists to other services.
