Comment by thinbeige | Hacker News Reader

Comment by thinbeige | Hacker News Reader

I read this article few hours earlier when crawling through the new section. It's a surprisingly interesting piece from Buzzfeed but there's a lot of bashing of the CEO, the CTO and one recently hired senior for label relations (who seem to be really odd).

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?

I didn't downvote, but:

- 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.)

> it's understandable that employees vent their frustration in public

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.

Does the fact that it's not their core contradict what I'm saying? Youtube is still hugely popular for people to share their own recordings and remixes.

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.

> Does the fact that it's not their core contradict what I'm saying?

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.

Youtube is about user uploaded content, and without a content recognition system in place for video and audio and licensing in place with both the movie and music industry they would have been dead in the water, just like SoundCloud. What other revenue streams would they have that would have worked without that?

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.

So my theory is that the business model is not broken by design as you claim

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.

Does the fact that it's not their core contradict what I'm saying?

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.

I cannot follow you. By no means you can openly criticize the managers of your own company. Even nowadays this could be handled as mutiny. On top of that, management is usually only half transparent at best. Causing doubt if the decisions are just bad or nobody got the whole picture.

You are right and I was not clear.

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).

We don't know what kind of NDAs SC employees had to sign/how valid they are. At least some of the issues are listed as only appearing after a while. Journalists likely are a lot more receptive to/asking around for employees with complaints when there is a general air of failure (or total overblown hype) surrounding a company.

> We don't know what kind of NDAs SC employees had to sign/how valid they are.

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.

I think it's right to speak publically when called for (for instance with whisteblowers). Without people doing that, we'd actually have much less transparency in our democracy.

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.

No offense and I am no lawyer. But I think you get something wrong about NDAs. It is useful to handle confidentiality of company information. I.e. during the process of signing contracts with music giants or even the strategy decision to do that, can apply to an NDA. But at some time this information will go public. An NDA could only apply if you later leak confidential details about contracts for example. There is also a lot of complaint about the management and it's behaviour, NDAs won't stop individuals to reveal someone has bad manners, but there is always a possibility to accuse them of slander.

tl;dr obvious fact > nda > deals behind closed doors

In my experience, it's likely that the founders' problematic behavior has existed from the beginning, but employees feared retaliation and thus didn't speak up until now, when they are safe from being fired.

> but there's a lot of bashing of the CEO, the CTO

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.

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