SoundCloud's Collapse
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They'll bleed you to death with licensing fees, deputise you into their copyright enforcement police, upload their songs to your platform on one hand while suing you with the other, and all the while cry about how extracting monopoly profits is so much harder than in the old days.
Just go disrupt something safer, like organised crime or the international diamond trade. At least with those the law probably won't change out from under you.
I really don‘t understand why Soundcloud tried to get into general, mainstream music streaming. Keeping their niche as paid host for DJs, radio shows, independent artists and small labels should have been their main focus. As a paid service for listeners (in contrast to artists) it simply can‘t compete with Spotify, Apple and others.
VC money is just something they needed because they couldn't do any monetisation without deals with the industry (too much of their content is non-fair-use derivatives of the big 3's copyrighted content) and they obviously can't stream millions of hours of music without some sort of money.
I'd like this to be true, but in practice it seems like most people (me included) strongly prefer hearing songs they already know most of the time, enjoy songs more with repetition, at least up to a point, and are more than willing to learn to like almost anything with high enough production value.
Some people are music snobs as a hobby and most go on discovery quests from time to time, but it honestly seems like most people most of the time want music they don't have to think too much about or devote too much attention to. Indie-only channels can't really deliver that.
While iTunes and Google Play gave chart toppers the spotlight, SoundCloud turned amateurs into professionals. "Nobodies" could put their music on soundcloud and get them streamed millions of times, and that recognition could eventually get them a chance to sign on a dotted line
I agree with that statement - dedicating significant energy to finding new music is a fairly niche hobby.
However, I don't think easy-to-find necessarily equals label-owned music.
I often listen to music for hours at a time in the background while I'm working or relaxing at home. I'll aim for an artist or mood and then I'm happy to let 'related tracks' from artists I've never heard of play indefinitely. If there's a track I really like I'll look at who the artist is and make note. I listen to a ton of "indy" music this way. Mostly, I never know who the artist is. Sometimes I discover new artists. All of this is very low effort on my part.
In fact, it would be significantly more effort to listen to megastar pop music or classics. I'd have to find a way to play the tracks - YouTube most likely, which means a ton of poorly thought out ads, or else paying for the songs directly, which usually is just slow and annoying.
I'd wager the biggest hours of music listening are for background music - at work, in stores and restaurants, while studying, while lounging around the house. I'm sure some people always want to listen to the same ten albums on repeat every day, but I suspect most people are driven more by ambiance. Indy music will do that job just fine.
Of course people will always want to play nostalgic hits. But I suspect that's a smaller driver of music consumption by hour of attention (or at least partial attention) than many people assume. That means the labels have way less power than people assume.
https://en.wikipedia.org/wiki/UMG_Recordings,_Inc._v._MP3.co....
Given that most sales are downloads or streams now, the only thing big labels can bring to the table is a nuclear level of publicity. And by definition, that's going to be reserved for a tiny handful of multimillion-selling household names.
Today's smaller bands and artists - which will be the majority - get no particular benefit from signing to a big label.
They may get some smaller benefits from signing to a smaller niche label, but they certainly won't get a big pile of cash from that.
The situation is similar to book publishing, where a tiny handful of massively popular signed authors get most of the publicity and the cash, but there's a solid underclass of midlist writers who do better with self-publishing, because they earn more from direct sales and - ironically - have a more secure career too.
There was a massive opportunity for SoundCloud to become Amazon/Kindle for Musicians.
MySpace had that space for a while but lost it. BandCamp is close, but doesn't quite make it because the default artist pages suck, and it sees itself as a store, not so much as a marketing and PR outlet that also happens to sell downloads and physical media.
SoundCloud could have won that space, but apparently SoundCloud's management never understood that there's more money in hosting associated services - web pages, mailshots, blogs, and so on - than there is in providing hosting for audio files.
In fact YouTube seems to be quietly taking over for basic track hosting, with the added benefit of video. There's no reaction feature on the tracks, but I'm not convinced that was ever an essential USP on SoundCloud.
But I still think someone else with VC backing could win this space and clean up.
Man, now I really want to build what SoundCloud should have been.
It's like sailing... Every bit of air that hits your sail will end up behind you, dispersed. That doesn't mean your boat will stop. You travel by charting a course where you stay ahead of a pressure differential.
Same in music. You need to find a source of new artists that will continually replenish you as you lose artists to platforms that focus on the stage after you in maturity. The beauty of culture is it always replenishes.
"In 2016, Spotify lost just over $600 million ($601.4 million), up significantly from 2015's losses of just under $258 million. This means losses increased by 133%."[2]
[1] http://www.swedishwire.com/jobs/680-record-labels-part-owner...
[2] https://www.forbes.com/sites/hughmcintyre/2017/06/15/spotify...
I think I love that phrase.
Which included $1bn in debt just last year: https://techcrunch.com/2016/03/29/stream-with-the-devil/
They wouldn't have raised that, if they were "just fine".
https://www.youtube.com/watch?v=wTOlrN5-UGU
In October 2010, Caldwell spoke at Y Combinator’s Startup School event at Stanford University about the failures of imeem and of the challenges still facing the music industry. At the event, Caldwell delivered a cautionary message for entrepreneurs interested in music startups. Caldwell criticized major music labels for holding too much power, focusing mainly on the industry’s licensing deals for content. He said that the current state of the industry made success for startups bleak.
While some commentators praised Caldwell for his harsh but realistic insight on the digital music startup industry, many critics (notably David Hyman, CEO and founder of MOG) felt that the lessons learned from Caldwell’s experience with imeem did not accurately portray the industry as a whole.
This sounds like terms dictated by the Mob. It's quite telling that the deal also conferred ownership on a content holder in order to be able to license and pay handsomely for their content. This is only one of the big 4 they were negotiating with too. By the time they get done negotiation with the other 3 they would have likely given up 15% of the company. Note the big 4 all have stakes in Spotify as well[1].
At any rate I think this should have been a sign that they were going down the wrong path. Propping up these labels and hitching your wagon to them, only to have to constantly renegotiate your deal with them every couple of years seems contra to a platform that gave artists direct access to music fans without the middle man.
[1] http://www.swedishwire.com/jobs/680-record-labels-part-owner...
The simple fact is that copyright protections are far too strong. The copyright cartel doesn't need a shady network of 400 pound men to enforce their schemes; they just use the U.S. Attorney's office instead.
How many bright technical entrepreneurs have been crushed by rent-seekers milking the royalties out of a 40-year-old track? Copyright has completely lost the plot. We need to rein it in, with the awareness that this will be no small task, as it amounts to taking away a license to print money from some of the largest companies in the world.
Anything after Jan 1st of 1978 is now capped at 35 years, so these are becoming less and less See:
http://www.songwriteruniverse.com/gosainkaplanrecapture123.h...
>"Copyright has completely lost the plot."
Well the copyright of the of recording is there to protect the record label's investment. They aren't going to finance a record and it's promotion if someone else can come along and also release the same recording and collect money for it. That was always the plot.
That being said artists don't have to sign contracts with record labels if they don't want. With technology and the internet it is possible today more than at any point in history to successfully release and promote your music without a record label. I thought this was the great promise of platforms like Soundcloud. If an artist decides they need the marketing muscle of a record label they can license their recordings to a record label and retain the recording copyright. I really believe this is the future: See:
https://www.theguardian.com/music/musicblog/2009/jan/29/reco...
https://www.theguardian.com/media/2011/sep/12/musicians-copy...
That was the case for centuries. Why is that such a bad thing?
And US copyright is definitely longer than 35 or 50 years -- try uploading an Elvis track to YouTube; I bet someone would notice.
For centuries? Given that commercial recordings weren't widely available until the end of the 18th century I am not sure where you are getting this from.
You are mixing different things - there is a songwriter copyright and the recording copy right.
A song being in the public domain(the expire of the songwriters copyright) doesn't mean you get to use the recording however you see fit. It means you can use the song as in record the song yourself and not pay royalties to Elvis's estate or whoever actually authored the song.
The terms of the recording copyright determine who owns the physical recording. Often after a number of years these can revert back to the original performer. This is known as a "reversion." Upon a reversion the original performer can then license the original recording as they please - as reissues, for inclusion on compilations etc. This is why you can't upload an Elvis song to youtube - because Elvis Presley Enterprises own the recording.
It's one thing to have legal rights; it's another to get people to actually comply with them, and the odds in court of a One-Hit Wonder from 1982 against a big record conglomerate don't seem too favorable, especially when the alternative is to continue collecting a royalty check.
There are a lot of points of inflection for a copyright broker like a label to jump in and attempt to run down the other party's legal war chest (a technique commonly practiced by large companies).
>Well the copyright of the of recording is there to protect the record label's investment. They aren't going to finance a record and it's promotion if someone else can come along and also release the same recording and collect money for it. That was always the plot.
The plot is as defined in the U.S. Constitution:
To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.
Today, the copyright regime stifles the progress of science and useful arts by cloistering our cultural, scientific, and creative heritage into the pockets of a few big corporations for a virtually unlimited period of time (the effective goal being "forever minus one day", as Jack Valenti put it).
Science and the useful arts are promoted by allowing rightsholders the opportunity to make a decent living out of their work for a while. They're not promoted by allowing rightsholders to make one popular thing in their 20s, live off royalties for the next 60 years, and then enable their posterity to be three or four generations of moochers for the remaining 60+ years left in the copyright.
We want to reward work, but not so much that creative people, let alone entire generations of their offspring, are deprived of the ongoing incentive to contribute. "Necessity is the mother of invention", after all.
Progress is not promoted by locking up cultural icons in impenetrable boxes. We're more concerned about a company's brand image than we are about free discourse or historical records.
Progress is not promoted by raining the force of the American government down on hackers and engineers who build communication systems that make copyright difficult to enforce, or by using arcane legal mechanisms like the CFAA and the RAM Copy doctrine to prevent developers from spidering the web.
I am all for allowing companies to profit, I'm a capitalist. But we need not take that narrative to its extreme and assume that we must allow corporations whatever is best for their bottom line without consideration to the larger social, cultural, and economic concerns at hand. People are creative and will find plenty of ways to cope with revised copyright laws. Remember, the primary goal of copyright is NOT to be a dollar-printing machine in the rock star's basement, but rather to promote the progress of science and useful arts, and we should structure things to ensure that is happening.
Copyright as it exists now primarily functions to serve corporate profiteers. The public only accepts it because it doesn't understand how draconian it gets, since most of the time their in-the-course-of-daily-life-infringements don't result in a lawsuit. We need to fix that.
The US is actually unique in that reversion is non-assignable, so an artist can't give up the right to receiving their music back even if they wanted to give it up.
The UK isn't nearly as kind in this regard. Duran Duran were recently prohibited by an English court from claiming their reversions in the US. See:
https://www.theguardian.com/music/2016/dec/02/reflex-action-...
No a song is not an "idea", it is piece of work that someone produced. And a recording of that is very much a physical thing. Why shouldn't the creator of that be allowed to own it?
Real property provides the basic needs of human life, and any single parcel or space can only be occupied or used by a single entity at a time. It exists in time and space as a physical good. Persons and families are entitled to protect this property, with force if necessary, because they depend on it for their ongoing maintenance and habitation.
Real property laws provide structure to our approach to real property so that we can live in a neighborly civilization instead of a smattering of independent militarized tribes.
Intellectual property, on the other hand, exists in an abstract, non-physical space. The same intellectual content can exist with perfect fidelity in an unlimited number of minds, and because intellectual goods are not subject to physical laws of space and time, they can be shared and utilized fully and simultaneously by everyone capable of processing and storing them.
This free-flowing nature makes intellectual goods extremely powerful, but it also gives them limited economic utility, because the supply is very hard to constrain. This was true in the past, and it's 1000x truer with the advent of the internet, which allows us to transfer intellectual goods practically anywhere in the world perfectly, exactly, and instantaneously. Now you don't even need to stay on good terms with the neighborhood sage for access to the treasure trove of intellectual goods!
Disembodied intellectual goods are useful, but they are not necessary for survival, and thus it is rarely if ever justified to use force in the "defense" of them. This is very different from real property, which must be reserved and defended to ensure survival.
To the extent that we do decide to use force to "defend" such goods, we should tread lightly. The analog to real property is very weak indeed.
Copyright essentially injects the government as a middleman into a voluntary and free market transaction, and says "I know you THINK you want that, but we aren't going to allow you to buy it from him, because we say someone else deserves the money more than him". Such interjections are another area where we should tread very lightly, and in recent decades, we have done anything but.
Our current iteration of copyright-gone-amok constrains our speech and does a great deal of damage that no one with an audience is willing to talk about, because they're all too busy enjoying the money stream from it to comment on its destructive consequences.
How is your speech being constrained by a record label anyways? A recording of a performance belongs to the creators of that recording. You don't have the right to reproduce it without paying them. That's that. It has nothing to do with your speech and everything to do with people in the entertainment industry getting paid for their work.
I've been paying SoundCloud for years. They had a business model. I use(d) SoundCloud because everything on SoundCloud sounded different than everywhere else.
There is so much content on SoundCloud, and they've been doing their best to bury it under tracks that I can find on Spotify. Back in the good old days, when SoundCloud was small enough to have advanced search (because they were still using postgres on the back end), I remember searching for Balkan Swing Electro, and there was a ton of it. There is no way for me to discover new things like that any more because groups are gone, search sucks, tags aren't freeform, and SoundCloud wants to be Spotify. SoundCloud owned the long tail of music, you could find everything that didn't sound like Justin Bieber making a remix with Diplo and Wiz Khalifa, and very little that did. I'm eagerly awaiting the next company that wants to own the long tail of music.
My money is on Clyp right now.
Because they have the lowest bit rate MP3s out of all the big streaming platforms?
But:
- SoundCloud neglected the platform.
- Then they did one of the worst redesigns of any site I've seen (try reordering a track in your spotlight [paid feature] in Chrome. Crashes the tab and has done for years. I need to open another browser to do that.).
- Then it became overrun with major label artists.
- Then they started offering features just to the big artists - various UI/branding options - (forgetting about the artists that got them to where they were).
- Then they did the whole paid streaming mess which they were never going to succeed in. Anybody could have told them that, I really don't believe anyone in that company thought 'Go' would work. I think they just needed to do something.
I'm not sure if they've taken so much money now that this isn't possible anymore but if I were CEO I would take it back to it's roots. Focus on the unsigned artists. Fix the site. Offer a distribution system (like CDBaby/TuneCore) so that SoundCloud can be a one-stop show for unsigned artists. Now you've got paid accounts (for stats/spotlight/unlimited upload space) and a small cut of distribution on all paid platforms.
I don't understand how in a world where more artists are getting big without label help nobody is offering a great platform for them. SoundCloud got very close in the past. BandCamp has gotten close too (although it lacks the social/sharing/viral aspect of SoundCloud). If SoundCloud does end up shutting down it's due to greed and poor management. Instead of focusing on what they do well and what people use them for they've tried to go after the money and they were much too late making that move to get any of it.
So what. There also many excellent major label artist and it's good to have them. Many new album releases are missing on SoundCloud but available on Spotify from day one.
Probably I am the only one but I find most 'DJ mixes' on SoundCloud lack in quality/creativity (I am into electronic music though). Maybe some like them I think 95% of them are subpar and sound like my nephew created a song with Magix Music Maker. These mixes and 'the extended repetoire' are no competitive advantage over Spotify and Co.
You're missing the point. I've no problem with major label artists but when you start dealing with them you start dealing with licensing. Then you waste time, don't develop the platform, and abandon the indie artists that got you to where you are. You need to take the point in context of the rest of my argument. When Spotify/Apple Music/Pandora exist why would you enter that market when it's not the market that you started in and you have no chance of beating them? Focus on indie music and you have a business where people actually pay money for the service and you become profitable.
>> Maybe some like them I think 95% of them are subpar and sound like my nephew created a song with Magix Music Maker.
Well that's how music discovery works. You have to go through rubbish to find the gems. If you want pro level stuff every time you should use Spotify/Beatport etc. I've been on SoundCloud since the beginning (since before it even became the go-to place for electronic music) and it was a great way to discover really good songwriters. You have to do some work to find them but that's part of the fun. SoundCloud tried to evolve into something completely different than it began as. Your expectations are a perfect example of how that skewed the public perception of it to the point where you and I believe it is completely different things - in reality it tries to be both but doesn't excel at either.
You think all those mixes come for free? They have to be licensed as well once the embedded song snippets exceed 30sec which most of them do (also depending on the local jurisdiction).
Soundcloud had to find agreements with the labels sooner or later anyway because of the mixes and just included the major label artists in the deal because why not. Otherwise they would have been sued (and they were sued by some)—again—because of the mixes.
> Well that's how music discovery works.
Ok, then let's agree on it's a matter of taste. But I'd like to revise my comment: 99% of the mixes on SoundCloud are cr*p. Maybe it's just my taste but I am also SoundCloud user from day one and somebody who spent tons of money on Beatport. If they can succeed with this music selection and find listeners like you and who pay, great for them, but obviously they can't. Btw, you find the 1% good mixes also on Spotify or Apple Music.
For the longest time they didn't offer a way to pay, and the now-existing payment model doesn't really do anything for someone listening to the small guys, so the only obvious about them not being able to find paying listeners is that without an offer to pay for there is no paying.
Spoken like a person who didn't understand all that was on the platform. You do realize that SoundCloud had basically spawned a different genre of hip hop and rap, right? It's not just dance mixes, there's a lot of stuff that's super unique on there and it's not just hip hop, rap, or edm.
Again you're not understanding what I'm saying. You seem to think of music (or SoundCloud) as only EDM. When SoundCloud started it was largely amateur and indie 'analog' musicians and songwriters (i.e. people playing instruments and writing their own music). None of that needs licensed. Those people, despite not making any money, were paying SoundCloud £9.99 per month to increase their storage space and see listener stats. Obviously I don't know how many but there were badges on the profiles to indicate a paying user and there were a significantly high percentage. There was quite a large community of this type of music around a lot of genres. None of it needed licensed. If you stick to indie artists you don't need to deal with licensing. People doing mixes can use MixCloud which automatically licenses uploads some how.
So, my point is, SoundCloud did not start off with DJ mixes or copyrighted material. It started off very legitimately and had a decent business model. They could have made a nice business out of it but like most SV businesses preferred to sink a load of VC money and 'grow' with no ultimate business model.
Edit:
>> If they can succeed with this music selection and find listeners like you and who pay, great for them, but obviously they can't.
My comment was nothing to do with listeners paying - it was about artists paying. Artists have always been able and willing to pay for spotlight/storage/stats.
How many times do you want to repeat this?
> SoundCloud did not start off with DJ mixes or copyrighted material.
The CEO and CTO were themselves very much into EDM. SC positioned itself repetoire-wise as a DJ platform from very early on, most tracks, traffic, the first surge were EDM-based the first years. And 99% was copyrighted material stitched together. I don't know where you have your information from but it's just blatantly wrong.
Anyways, I think that our current discussion does not contribute to the initial points in any way and doesn't make us both feeling better, so I stop here. Have a nice day!
Soundcloud is still good to get DJ mixes from DJ's I like, but I can seeing it go away just due to all of the costs that would accompany trying to ensure they have the right to share everything that is posted by users.
What the parent and I are saying though is that DJ mixes were a small part of the content in the early days. It wasn't created to host DJ mixes or marketed as that initially. Producers/songwriters/amateurs were the bulk of the content. SoundCloud could have built a decent business by banning copyrighted material and only dealing with original works. There was never any need to get into the messy licensing business.
By definition they are about selection. Creative live mixes are performed in live events.
I use Soundcloud to discover new music in mixes. There’s something exciting trying to ID track using Shazam (cancer) or writing the time down and coming back every few months to find if someone else ID’d it.
I’d really like if they defaulted mixes to 320kbps tho. And streams stop randomly on Safari, while Chrome crashes after few hours of playback. Filtering options could be improved too, and Discover option is almost always suggesting me individual tracks - something I never listen to. Oh and there’s buffering problem between tracks that prevents to be used as continous stream.
Bandcamp, with its "Courier New" interface, has delivered hundreds of millions of dollars in value to its users and artists. And it's still growing.
That's cute that soundcloud made a bunch of blog posts about their super elite containerized microserviced architecture. How's their business doing? Who's making money on there besides industry plants?
Yet it's the sole music app I use: all of my favorite artists and music are on SoundCloud. The only thing it has going for it is the community.
>Frankly I've never read an inspiring development article from Bandcamp a engineering team.
I don't know the actual user numbers, but I'm guessing this is because Soundcloud has had to scale a lot more than Bandcamp has and not necessarily because Bandcamp's engineering team is worse.
But, hey, maybe Soundcloud did have a top-class engineering team. Doesn't really change my opinion of it, since I've always considered it the worst and least user-friendly out of all the streaming platforms (mid-song user comments I can't disable; next song autoplay that I can barely find the playlist for, with seemingly no relation to what I was just listening to; horrible sound quality; hideous and distracting color scheme that distracts from the music, much unlike BC).
That may be entirely the fault of the management and not the engineers, but still.
I didn't. I said they had gotten as far as SoundCloud which was close to the right product but not close enough.
>> SoundCloud engineering is worlds ahead. They were one of the biggest proponents and pioneers of containerized microservice architecture.
As a user, why should I care? After the redesign the product became abysmal to use. There are major bugs (like reordering spotlight in Chrome) which have been around for years with no fix. That's a paid feature, broken in a major browser for years. There are also still (or at least there were recently) some pages using the old interface. They wasted time building Go instead of fixing the almost great product they already had.
If I want to find pop punk from some unknown, Bandcamp makes it stupid easy to find them and download/buy their stuff and/or go see them live.
I really don't agree with that. While there's room for performance improvements at Bandcamp (the site can be slow on fridays, which is release day for most albums), their user experience and design is just fine and very functional.
Discovering an album via recommendations in your activity feed and actually purchasing and downloading said album is a matter of seconds.
It takes me longer to remove 5 items from a Soundcloud playlist, which is a process that involves opening and closing a modal window 5 separate times.
If one of those platforms feels neglected and dated it's Soundcloud.
Is SoundCloud worth a billion dollars? Well, it might be on paper or in the imaginations of the founders, but what does it really mean? To me, it's worth nothing.
The real problem is: these companies start to operate from the perspective of "having" those millions of dollars. This is why they hire too many people for too much money. They spent hundreds of thousands on marketing.
But in the end, you know what? They need to beg for money to pay their debts. They need to lay off dozens of employees because they don't have the money to pay them.
What if SoundCloud would have kept a small, yet highly skilled engineering team of maybe ~20 people, some marketing and sales, and try to not outgrow themselves? Probably they'd be having a huge surplus each year because their costs would be small and sustained.
When I read stories like these, I actually feel good about my bootstrapped, down-to-earth startup. We don't make millions, we don't "disrupt" the industry, yet we solve our customers' problems and delight them. We won't ever run out of money, as we carefully check each and every expenditure, and have growing savings in the bank.
I'm a big fan of bootstrapping myself, and it's the best model IFF you can get by without investors. If you, like SoundCloud, have a product that does not break-even, then you will need investors, period. Of course you could say - well, just don't make a product that nobody pays for; but obviously there is a market for such products, on the investor side.
Till one point, when the business is so big, growing engineering team to over 100 is inevitable. But plently of really successful tech companies did not overgrow their team size for a number of years. E.g Facebook.
Human captial spent is actually the most expensive even comparing space rental if you add up salary, bonus, and benefits. I also will not recommend startups in their early stage (or even until they can break-even for a long time) to flu candidates over. There is really no reason to fly people over until you want to hire that person. Flying and hotel adds up big time too. Google can offer this because spending a couple millions doesn't matter to them.
A much better example is WhatsUp with 55 employees at the time of aquisition.
Again, find a company out there did not create their infratructure with common solutions and only begin to develop custom solution when they afford and they really needed it. Several years later.
Why would a VC want to see their money burn to the ground if all they see is hiring 200 people when you really just 100 people?
"the guys I invested in are killing it they just doubled the headcount" VC pitching LP's for new fund.
The entire industry is an RPG played with real people and real money.
Sometimes returns happen, but in many cases they seem to as much by accident as careful design.
...but when you have an 80% loss rate, you have to play the game more than a hundred times to reliably make your money back.
...but I doubt you're investing in hundreds of companies; which means, you're probably walking away with nothing.
Remeber, those numbers only work at scale; in small numbers 80% failure for 5x return = you get nothing. Just like the soundcloud investors will.
This reminds me of the current ICOs and the token economy. Early adopters try to push new currencies like crazy to cash out once popularity peaks.
SoundCloud was never thought as a real business. Everybody involved in the music industry should have known that it's not possible to build a solid business based on the oligopoly of three music labels and with Spotify having a headstart of 50m users and being still not profitable.
But still all these VCs with USV leading the way told us it's the next billion dollar unicorn. Old-school pump and dump.
Still it's a long-term pump and dump game. VCs praise their investments to the utmost (which is their job and because their believe in their investments) but mainly to attract more investors (pump) and at some point to find potential buyers (dump) where you can exchange retail investors with dumb corporations.
You don't have to think it's the best thing ever. Or that it'll surely work. But you can still think that it's a pretty decent investment, high risk, high expected payout.
I could try to sell you a magic goose and I can really believe it will lay golden eggs any time now. interested? I even have ten of them myself!
of course not exactly the same thing, not in the same environment. sure, comparisons are important, but it's not beyond reasonable to doubt that for some stated reason soundcloud will be different.
and they're not dead [yet]. (I'm not affiliated with them anyhow, and I too think that their UI is pretty shit.)
Well, the users of Soundcloud have, arguably, not lost out. All in all, I've gotten mostly positive experiences from it.
You hear the same style of argument made w.r.t. Uber: VCs subsidizing our rides. VCs subsidizing our... whatever-you-call-soundcloud.
This is why you should cash out when you have a decent return. Otherwise, you could become what is called a "bagholder".
So, websites like soundcloud find themselves in a bind: on one hand they can't start making lots of money because they would lose their artistic street cred, on the other hand their servers and bandwidth cost money. Blaming this lack of money for artistic on the economy seems a little bit off, this has basically been the case since Roman days.
I feel sites like github have a nice middle ground, charging a little bit to professional users while offering the service for free to open source users. It doesn't lead to billion dollar valuations quite as fast as an advertising model though...
I think a self-hosted soundcloud where people host their own music but use the network for discoverability might be one of the few use cases where decentralization actually makes a lot of sense, because since the users are not (mainly) in it for the money the economies of scale from centralization don't matter as much.
I guess I'm failing to understand what your vision of a better music market would look like. Can you describe it?
Consider a market with genre A with 1 million listeners, and 10 million other genres with 1 listener each. We can agree that the definition of the word "mainstream" will be such that genre A is "mainstream", and yet there is much more money in the sum of the non-mainstream genres.
> I guess I'm failing to understand what your vision of a better music market would look like. Can you describe it?
When I said "valuable ecosystem" I meant culturally valuable, not necessarily revenue/year valuable. I am simply saying that it would be nice if our world satisfied the following:
IF:
Some sound engineers who are into electronic music create a website which allows lots of people to share underground electronic music with each other, and start employing people to work on the website
THEN:
The website can continue to play the role which people have come to love it for, without having to change much, and the employees will be reasonably and stably compensated for working on the website, indefinitely.
The issue is that such websites come to be abused and people upload copyrighted material (like youtube). Then the record company sues and the website cannot stay alive any longer.
The issue is that the companies do not have the originals to fingerprint since they are held hostage by media companies... :/ Maybe there is a way to fingerprint using pirated music or youtube audio?
As for youtube, it was filled with pirated content and was getting sued to oblivion until Google saved them.
Jokes aside, having to negotiate with tons of artists and their labels/managers, I imagine their legal/business department is significantly bigger than that of most tech startups.
AC/DC, Led Zeppelin, the Beatles and Taylor Swift come to mind, but there are very few artists who have a say in whether or not their catalog can or can not be streamed. Those artists made wise business decisions at some point and/or were able to throw their weight around. Here are some notable hold outs as of 2016 anyway:
https://consequenceofsound.net/2016/02/which-artists-are-sti...
Using Pink Floyd as an example, the decision was there's and not their record label EMI:
http://www.rollingstone.com/music/news/pink-floyd-catalog-ar...
Because if they want to have support at all (unlike, say, Google), they need quite a few employees.
You need sales people to sell ads, designers to build out the creatives (assuming the company you sold ads for doesn't have media that fits with your platform). Then you need account executives to manage the account. Then you need a billing department that collects the money. Then you need engineering to build out your ad serving abilities.
For IT you have the core that builds what some here have called a "shitty" UI. Then you have people working on all kinds of invisible things like developer tools to support releases. People working on recommendation engines. People working on instrumenting data and metrics for business analysts.
Then you have people who hand-curate music for each of the markets and local tastes that Spotify operates in. Then you need people to manage these people... Etc.
I was curious if this was true, so I asked a genie to see if you (as a bootstrapped founder) would trade $20 to own SoundCloud. Well it turns out the genie ran the experiment and concluded that not only is it worth $20 to you, but way more - in the genie's experiment you'd actually trade both $20k and even $200k for SoundCloud!
So I looked at your comment in which you say SoundCloud is worth "nothing" to you, like a bad black and white photocopy of a hundred dollar bill, and the truth is you value it at hundreds of thousands of dollars more.
Logarithmically, your valuation (10^5.3, which is all the genie tested up to but for sure you accept) is closer to a billion (10^9) than your stated valuation (10^0 - 1).
So after reading your analysis the billion dollar valuation seems more reasonable than the analysis you offered. (Of course, that does not make it reasonable.)
/s
On a serious note: what I mean is that the next time you make an argument about valuations being "ridiculous", don't be "ridiculous."
EDIT: received several downvotes but I am keeping this.
$0 is not reasonable.
Then it's not a startup. A startup is designed to grow quickly. Everything we associate with startups stems from the fact that the successful ones do make millions within a decade.
For it to be a startup, you have to have a large target market. That means any competitor that chooses to grow quickly will trounce one that moves slowly.
Making up your own definition of startup ? A start-up is just a newly established business.
That's like calling a newly established barber shop a startup. It's not.
The GP is working on a podcast hosting company. The market for people who want to host podcasts is miniscule. Large enough to sustain a company, sure. But that's not a startup.
Besides, there have been multiple "podcast startups" (by the valley-definition of startup) in the past.
It doesn't matter whether it originated in the valley. It's not like calling an elevator a lift. A startup is a technical term with a precise meaning. You can call your bar a startup if you want, but that doesn't make it true.
I think companies that don't follow that definition have an agenda: startups are now prestigious, so they call themselves a startup in order to seem impressive.
Sad, but it's just human nature.
My point is that it's really not. The term existed before the valley-definition and it exists outside of the valley-definition. Yes, Paul Graham and others popularised that definition (and I personally think it's a good definition and usually use t as that), but it has existed and continues to exist with other meanings, so it's far from a "precise technical term".
If a business is small and stays small, then at best it's a failed startup. If it's designed to stay small, then it's not a startup at all.
You can argue any other point, but you can't avoid the growth criteria. And if you have that, either you grow quickly or your competitor will put you out of business.
My point is that a podcast hosting company has no growth potential. The target market is too small. A startup could use podcast hosting as a stepping stone toward a bigger market, but in absence of that, it's a business like any other. And there's no shame in admitting that.
But it's really strange to insist it's a startup when it's not. Imagine insisting that a desktop computer is a chair just because you can sit on it.
Dictionary.com says "a new business venture, or a new commercial or industrial project".
Merriam-Webster says "a fledgling business enterprise".
I don't mean to be difficult but it's annoying that some folks on HN insist that PG's definition of "startup" is the only possible one. It's a useful definition, but people who use it the non-PG way are not wrong either.
But more seriously, the term is somewhat vague and is often misapplied.
If someone built a bar in your neighborhood, would you call it a startup? It meets all your criteria. But at that point the word becomes useless.
You could argue that it's not a new service. Yet some of the most successful startups applied technology to old ideas, like Craigslist and eBay.
If tomorrow 250 people are queuing to get a drink from your bar, you won't be able to cater to their needs, nor the next day, opening a new brick-and-mortar business takes a lot of time.
A startup would be able to scale (after a couple of days / week) and fulfill the customers' needs.
I'm convinced that the startup scene is now filled with posers who call themselves startups for prestige. This probably isn't a new phenomenon, but it's relatively new on HN.
I am sorry but where is that criteria codified? This is nonsense. Here is an article with 14 founders being asked what defines a "startup" and only one of them mentions market size:
https://www.forbes.com/sites/natalierobehmed/2013/12/16/what...
>"Everything we associate with startups stems from the fact that the successful ones do make millions within a decade."
No, that's the sensational media coverage that associates that. Further what is meant by "make millions"? Millions in revenue when you are losing millions is not really an indicator of success is it? Also Uber, Spotify at 8 and 11 years old respectively both have millions in revenue but lose money. Are they "successful"?
The context of the entire comment was that this definition was not universal.
An ad hominem doesn't need to be an attack to be an ad hominem. It's just an argument against the person instead of an argument against their argument.
It's more like company valuations are the best approximation possible. Of course the value can turn out to be way off.
Perhaps you're not in a critical mass sort of industry?
A single case never proves any generalisation.
(I'm not taking any position here on what such valuations mean in general - it's not something I know much about).
This is the funniest correction I've ever read :)
A previous manager of mine insisted on all documents using 12pt Arial with 18pt line spacing...
Does this happen at other startups?
In corp I've seen engineers go behind their manager's back to write something in their favourite language knowing it would've been rejected if discussion had happen beforehand.
Not saying that the extent to which it was apparently done at soundcloud should be acceptable though.
But be aware there are two sides to this coin and you might be the one that needs to learn. My questions are always : is this part of a pattern (conflict, poor performance, bad behaviour?); why don't I want to sit with this person for 2 hours with a coffee and understand whats going on?; why didn't the coffee heart to heart work out?
That said, probably more often than not, there’s an actual value in it.
For example: Android was a completely diferent tech stack from google.
Maps: bought
Youtube: bought
Android: bought
What else?
They are still more or less separate software stacks. (Disclaimer: This knowledge is outdated by about 2 years, but a significant change is unlikely. )
And too often little consideration is given to impact further down the line. E.g., does this tie up your development teams in future doing non-value-adding work to fix breaking changes? What effect does this have on ongoing support costs? How easy is this skillset to hire for? How does this fit in with our roadmap?
But it doesn't matter because I've bolstered my CV and by the time those things become really painful I'll be long gone.
</cynicism>
How can a programming language choice hurt the business through some mechanism other than productivity? You could say that such a behavior is "indicative of poor choices" but that's begging the question.
Programmer hourly rate * amount spent on doing such tasks = project money spent
Now how has the project money spent impacted the overall project costs, compared with the solution that everyone else is using, including the training costs for the rest of team, setting up a new build infrastructure, possible extra tooling support, salary rates for new hires?
Somehow I feel many coders would profit to learn a bit more about business and project management.
You're not understanding me. I'm saying that if the work would have this good business impact with the original language, then doing the same thing with better productivity (with the same worker) is better.
I'm not saying that improved productivity is guaranteed to mean business impact. Just that it either makes a good thing better, or it takes a bad thing and doesn't make it worse. If someone is doing the wrong work, their rate of production is not to blame.
> Now how has the project money spent impacted the overall project costs, compared with the solution that everyone else is using, including the training costs for the rest of team, setting up a new build infrastructure, possible extra tooling support, salary rates for new hires?
Other than 'salary rate', all of that falls under productivity. If all those costs are going up enough to drop productivity, then the entire premise goes out the window! The premise was secretly using a different language to increase productivity. Secretly using a different language to decrease productivity is so obviously a bad idea that it's not worth discussing.
I remember a time when hiring RoR guys. Even the codebase was already in RoR, every new RoR dev said 'OMG we have to rewrite the entire app, the codebase is a mess'.
[1] https://www.slideshare.net/pcalcado/from-a-monolithic-ruby-o...
This is typical: SoundCloud was an iconic company, its founders worshiped and idealized. Once money runs out, people but especially former employees start to backstab, blaspheme and blame loud and clearly. Why not before? Now when everybody is hitting SoundCloud it's easy and risk-free to join the hate. All the NDAs they once signed seem to be gone? To be fired also means fire and forget for them.
I never believed in SoundCloud. The founders did a great job building a huge brand and DNA out of nothing but the business model is by design broken or to put it simply, you just can't do business with music labels.
Btw, where is Fred Wilson? The biggest proponent and investor of SoundCloud who didn't miss an opportunity to tell us that sound is the future stays silent and hasn't commented this tragedy once. A VC just for good times?
EDIT: Why the downvotes? Mind to share your view?
What I mean: Since they all signed NDAs they are not allowed to openly criticize their company—ever. Not when being hired and not after being fired. Since 173 were fired it's easy to ignore NDAs because they won't get caught. But it's not right, they break a significant agreement and this is so typical for employees (just head to Glassdoor and how much internal stuff is disclosed).
Every employment contract has by nature a NDA embedded. And those are much stricter than dedicated NDAs since employment contracts get rarely negotiated line by line, most employees just accept and sign employment contracts.
Companies where employees actually keep secrets do so by earning the trust and respect of their employees, not by writing ironclad employee agreements.
In this particular case, for these employees, I think it boils down to whether they honor their loyalty to the company vision more than their employee agreement.
tl;dr obvious fact > nda > deals behind closed doors
- Presumably the people inside the company has tried for years to pressure for a change. When that doesn't work, and especially once a big layoff happens, it's understandable that employees vent their frustration in public. And that might be what it takes for outside people (investors etc) to make necessary changes at the top. It's not about backstabbing.
If these employees didn't care at all about the fate of the company, they would just take the severance package and move to other jobs without saying much. The complaining you hear is most likely from people that _care_ about SoundCloud.
- You're saying that the business model is broken, because you "can't do business with music labels". YouTube is evidence that it _is_ possible, it's just tremendously difficult.
You need advanced algorithms to detect copyright ownership, you need a system to do revenue sharing, you need people to handle complain cases etc etc.
The reason why they failed has to do with poor strategy and execution, and less to do with the business model.
(This reminds be of all the people that said Apple could never get into the cell phone business because dealing with the operators would be impossible. Or that web search was a broken business model back then Yahoo-like portals were all the rage and web search truly sucked.)
They still break an agreement.
> YouTube is evidence that it _is_ possible,
Music isn't their core. And btw the agreement between Youtube and the German GEMA took a decade.
I know that it took a long time for YouTube to figure out the licensing stuff. As I said, tremendously difficult, yes, but not impossible.
Yes it does. Youtube is not about music, their focus lies somewhere else, music complements their product but they are not dependent on it and besides, it's a just one rev stream compared to their main rev channels. Another example: Apple has Apple Music to strengthen the network effect of their products, not because they want to enter the music business. So, both used labels to complement their core products. Both would survive without deals to the labels. SoundCloud would not survive without those deals because then SoundCloud wouldn't have any product.
> As I said, tremendously difficult, yes, but not impossible.
I disagree, 10 years negotiations sounds like something impossible for a company which core solely relies on music, who wants to fund a company for 10 years with an unclear outcome?? For Youtube it was a different story: In this ten years Youtube severely damaged GEMA's reputation by displaying billion times that it's GEMA's fault that user can't listen to music. So, it's questionable if any other company with less power would have been able to strike a deal with the GEMA. Anyways, Youtube could have negotiated 100 years, they still would make revs through other channels.
As the article mentions, SoundCloud eventually did reach an agreement with the music companies, showing that it didn't have to take 10 years, but took longer still than they expected.
So my theory is that the business model is not broken by design as you claim, but that SoundCloud got into the trouble it is now in by poor strategy and decision making.
If the solution is that they just charge $80/mo, then "well duh," but there are other, non-licensing, forces involved at that point. The labels would love their slice of that model, but good luck selling it.
I'd say "yes." The PROs don't have as much leverage over YouTube as they do over music sites. YT can tell the industry, "fine, we'll just continue the way we've been going and you'll get nothing." Google has scads more money and lawyers than the record industry; Google makes the entire record industry's annual revenue every two months. UMG ain't shutting them down.
You'll notice that Google Play Music is not the same situation as YT, and is more like Spotify et al. The issue with pure audio streaming is that the music is a primary use of the service, so it's easier for the PROs to beat them down, legally. GPM could be prevented from operating just as other subscription streamers have been (threatened).
Put another way, YT still has a bazillion unlicensed items and the licensed streaming services have none. UGC audio sites are somewhere in the middle, but my contention is that they would have to let the PROs crawl up their buttholes just to unlock the doors every morning in order to settle the business model.
That's because it's the leadership's fault for the failure.
> business model is by design broken or to put it simply, you just can't do business with music labels.
If the business model is broken, they should pick something else. Again a leadership problem. Becoming yet another streaming service was a major error and completely preventable.
Soundcloud is an incredibly valuable property. They have obviously had a few managerial cock-ups, but in reality they have massive user buyin, huge network effect, and anyone who can get some equity in them during this current time of massive negative sentiment is going to do VERY WELL. I wish I had a way to buy in at this point.
would happily become a premium++ subscriber if money went to artists, something like humble bundle... but the paid plan is brain dead and offers no value ┐(￣ヘ￣;)┌
hope it survives or morphs into a decentralised platform that artists can thrive on.
I have somewhat mixed feelings about Soundcloud. On the one hand I've discovered a load of cool stuff through them, as well as uploaded a few tracks of my own.
On the other I received a takedown notice from them after a complaint from Sony about one of my remixes - my most popular track by miles and, at the time, the third most popular remix of Rick Astley's Never Gonna Give You Up (long story) - which left something of a bitter taste in my mouth. To add insult to injury the notice arrived on my birthday last year. Haven't really touched Soundcloud much since.
And how come I have to pay for the artist album through Bandcamp after listening on Soundcloud? Is there no way to implement a payment straight from Soundcloud?
Also, there is an obvious return of the podcast scene: here again, plenty of ways to make money from that.
SoundCloud is far from 'failed' the service is still the go-to website for new music and I do not see a replacement at this time.
It's easy to write those things off as petty gripes but I think they are important in that illustrate a CEO who doesn't understand that those are bad "optics" for employees who are seeing layoffs and lack of funds available to higher talent. And a CEO who doesn't understand the nuances of this might also not see the nuances of lots of other important areas of their business. Why does the board not remove him?
>"Optics is a term largely reserved for the stage of political theatre"
Yes and much of what a CEO has to deal with is internal politics. You realize that "politics" in the general sense has a meaning and usage outside of just government right?
>"that is not my assertion, that is the zeitgeist of popular opinion."
It's quite amusing that you want to take someone to task for their usage of word simply because you have decided it is no longer "fashionable" and then you go on to use the word "zeitgeist" incorrectly. See:
It's in both Merriam-Webster [1] and UrbanDictionary [2] as simply relating to public perception, whether it's politics or business.
Weird that you think it's necessary to tell someone what words to use. Do you have a citation for this word suddenly vanishing from English in the past 6 months?
[1] https://www.merriam-webster.com/dictionary/optics [2] http://www.urbandictionary.com/define.php?term=optic
What does that even mean? Optics as in internal and external perception and politics is fundamentally important to a company. Leadership only works with trust and respect.
> CEOs are largely just figureheads these days
Looks like that's the case at soundcloud but in normal healthy corporations, CEOs do actually make decisions and drive the company. They can and do become the face of the company but that's just part of the role but not the only thing they are.
Our first rule was that we will not get funding for anything than scaling a business once it hit some sort of product market fit.
Until then there is only bootstrapping. This is to avoid something like SoundCloud where you become numb to the die hard reality of needing to build a business before you build an organization, get fuzzball tables and promote your altruistic business principles.
It could very well been worth it. What has been built might bring in return on invest for a long time.
Isn't that normal? Isn't VC money intended to be used that way? Are VCs demanding to build jobs for eternity? Or is there some moral reason to not grow and shrink the work force while building a company?
I also gave Go a chance so I could download stuff I liked onto my iPhone. It was such a confusing service. I paid $9.99/mo to download tracks. There was no way to download albums. It was also difficult to find things that I wanted to hear. I cancelled after a month or so.
In my eyes that was just flushing huge amounts of money down the drain.
But how would they have been able to monetize?
* Let fans support their favorite musicians a la Patreon and take a % from the donations?
* Partner with music labels to help them scout their next upcoming talents?
* Help musicians book shows at venues and take a % of the sales?
It has been catching on like wildfire everywhere I look, even big conservative companies. It feels like the new Nagios (in a good way).
[0] http://www.thefader.com/2017/07/26/wetransfer-soundcloud-emp...
The price of music is negative in that people have so much music available that you'd have to pay people something or massively promote to get people to spend time listening to a new band. Companies like distrokid seem to do ok because they charge artists to distribute music. Fans really can't be bothered to pay anymore.
I never said to myself, at least in the last ten years: "damn, I wish I had more music". For me, music is "done". I have plenty, I don't need anymore and it is of much better quality than what it used to be back in the 80s and 90s when I used to spend a lot of money on it.
- They need to evaluate how their (IMHO) only competitor HypeMachine does its things, and if possible consider an acquisition
- While probably very costly they need to redesign their website (and app), their latest redesign was received very negativly
You don't need to partner with record label any more to be on iTunes, Apple Music, Pandora, Google Play, Spotify, etc. You need $20 a year. The goliath that SoundCloud was fighting killed itself.
As a creator, I know there are 10x more people listening on Apple and Spotify. There is simply very less reason to upload on SoundCloud except for community. And it is the community that they managed to piss off by partnering with the labels.
As a result, SoundCloud faced a notorious problem of wholesale transfer pricing [1] power. And it didn't have enough money to win or even participate in that battle.
[1] Wholesale transfer pricing = the bargaining power of company A that supplies a unique product XYZ to Company B which may enable company A to take the profits of company B by increasing the wholesale price of XYZ.
Yes they are having a hard time but it there no way to continue with a small team?
As a Soundcloud user there is nothing telling me it is dead. Fresh music every day. So it's not like an exodus is happening.
Yeah, this was in the first section of the article:
"In early July, SoundCloud laid off 173 people — some 40% of its workforce"
and the rest of the article outlines the collapse of their business deals and troubles.
I have no idea how big BandCamp is, in terms of both users and developers.
This sounds like a serious mistake. All the ones that succeeded asked for forgiveness afterwards rather than wait until they had permission.
No thanks.
How much are you looking for ? and how much are you willing to pay for that ?
I am paying for music storage, but playback should use source quality at all times. Exceptions are when the track is uploaded in a lossless codec like WAV or FLAC. Then it should be OGG compressed. If you use MP3, at least use 192 kbps or better 320 kbps.
Example: https://clyp.it/ allows 320 kbps streaming and it costs 0$.
You can hear the bad quality by comparing it to a high quality version of the same song on good speakers.
I use SC everyday almost...I don't get this "collapse"?
Should I turn in my coolkid badge now?
TL;DR (without my opinion added): Top Management started too late to think about making actual money. They also hired an asshole for their US offices. When they got an opportunity to be bought by Twitter they asked for way too much money. And the CEO is bascially on a constant holidays trip since 2014, while not failing to rub it in everybody's face via Instagram photos.
Personal opinion: I don't understand these CEOs who start cashing out before either selling their business or making it a viable paid service, while being so close to a lifetime solution to the problem of money. I mean he already went 80% of the way, much further than most.
The writing style is just fine, it's surprisingly high quality considering this is coming from Buzzfeed (even if it's the new serious branch).
Now it will produce shaming news for 1-2 years before someone buys it for a few million, drops 80% of the staff and then turns it into a low-level cash cow to fund his own private jet.
What do mean with this sentence and content corpus??
That burning man matches their DNA?
I assumed something in the direction what you wrote, btw way better articulated, but I wanted to get it confirmed.
Apparently this happened in 2016: http://www.poynter.org/2016/buzzfeed-undergoes-company-wide-...
Their investigations team is especially interesting: https://www.poynter.org/2016/how-buzzfeed-built-an-investiga...
The first story I saw was breaking news of the Tianjin explosions and of course the story was so out there that, because it was Buzzfeed, I didn't believe it until I'd watched some of the footage and seen it reported elsewhere.
Anyway, yes, they are surprisingly decent.