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SoundCloud axes 173 jobs, closes London office
By Chris Cooke | Published on Friday 7 July 2017
SoundCloud yesterday announced that it had axed 173 jobs at the company, which equates to about 40% of its workforce. The firm’s albeit modest London office is also closing, with the focus now on Berlin and New York. It was a dramatic move that will make it all the harder for the digital business to find a positive spin whenever it is responding to those occasional predictions of SoundCloud doom that do the rounds from time to time.
It’s no secret that the streaming firm has been struggling for a while now as it tries to pivot its business away from primarily selling storage and bandwidth to content makers to becoming an advertising and subscription-funded streaming platform, more in line with Spotify and Apple Music but with a wider catalogue of tracks from grassroots artists.
It had already spent an awful lot of money before moving into the ad-funded and subscription streaming space via long-negotiated deals with the record companies, music publishers and collecting societies. And, of course, by that point the streaming market was an incredibly competitive place led by the deep pocketed Spotify and Apple.
Which isn’t to say that SoundCloud doesn’t have its USPs. Its freebie userbase is bigger than that of its competitors, and the platform remains a go-to-destination for early-adopters and opinion formers looking for new music. But the big question is: can you monetise that?
It’s widely believed that SoundCloud can only really work long-term as part of a bigger business. Various companies have been linked to a possible SoundCloud acquisition, last year mainly Spotify, of late mainly Deezer. Though any such deal would likely require SoundCloud to accept a much lower valuation than it has enjoyed in the past.
It remains to be seen whether any such deal can be done, though in a statement on the down-sizing yesterday, founder Alex Ljung talked about the cutbacks being required to achieve “long-term, independent success”.
Ljung wrote: “In the competitive world of music streaming, we’ve spent the last several years growing our business, and more than doubled our revenue in the last twelve months alone. However, we need to ensure our path to long-term, independent success. And in order to do this, it requires cost cutting, continued growth of our existing advertising and subscription revenue streams, and a relentless focus on our unique competitive advantage – artists and creators”.
Honing in on the jobs cull, he continued: “With more focus and a need to think about the long term, comes tough decisions. Today, after careful and painful consideration, we took the difficult step to let go of 173 SoundCloud staffers and consolidated the team into two offices: Berlin and New York. We are extremely grateful for the contributions of each and every staff member who will be leaving SoundCloud, and we wish all of them the best. Without them, we would not be where we are today”.
Seeking that positive spin, Ljung concluded: “By reducing our costs and continuing our revenue growth, we’re on our path to profitability and in control of SoundCloud’s independent future”. Though, for many in the music industry, yesterday’s announcement was seen as yet further proof that SoundCloud’s future will never involve both “profitability” and “independence”.
