SoundCloud saved by emergency funding as CEO steps aside
techcrunch.com
techcrunch.com
"The new management should provide some additional confidence. I’d interviewed both Ljung and Wahlforss in the past, and neither had answers to the big questions facing SoundCloud about its product direction, business model, and the spurious copyright takedowns that have eroded its trust with musicians."
On the other hand, existing employees equity value is likely wiped out in the down round. They are underwater on strike price of options, face additional dilution from prior investors' anti-dilution provisions and now liquidation multiples/preference from investors.
Yeah, they're toast.
We can debate the long list of HBS graduates that have been amazing operators in tech companies. Every CS grad isn't a great CEO & every HBS grad isn't a terrible CEO. I wish the world was that simple.
You'd be surprised at the number of graduates doing simply ordinary or mediocre things. Not that there is anything wrong with that - not my point. Just that the halo is often the best thing that someone is left with years after graduating.
Now if someone were to say that a Harvard Business School grad came back home to try and help their small family business I might think the statement is more appropriate. But at the level where you get a job like this not as much so.
[1] And I went to one of those 'good schools' (Not that one but in the same category let's say).
I do not exactly get what you are trying to say here. I'm not being snarky but rather genuinely curious. Could you explain?
Maybe similar to getting an academy award is better than whatever money you might make from getting an academy award (or a nomination).
The branding and the halo of that degree opens up doors and generally tends to lead to positive acceptance in a wide variety of situations.
On SC specifically, I do believe that a company that has had issues with financial management and business model will benefit from someone with business training and experience operating a media business with similar characteristics. Kerry seems like a solid hire for the role. He may still fail.
If you didn't intend to express a bias then what is half of that sentence, other than unnecessary filler?
HBS is probably as good choice as any if you are going to get a general business background. And CEO of Vimeo seems like a great work experience with substantial ability to pattern match.
That is very different than saying that “all Harvard grads make great CEOs” If the biggest challenges were legal, I would probably want a CEO with both theoretical and practical legal background. If the biggest challenges were related to security, I would look for someone with background in security, etc.
My bias is finding a CEO with relevant prior experience. Especially in a turnaround situation, I would not want a CEO who is learning on the job.
Should've stuck to just 'CEO of Vimeo' then. In most tech companies an MBA exec is seen as a negative (at least by the engineers). What you did matters more than whether you have a degree or not.
Second, you are presenting this as an “Or” between education and experience. If I had to choose, I agree with you and I would also choose experience over education. However, it is a false trade-off since this CEO has both which I would choose over just having one.
> That is just a bias
OK. Later:
> We can debate the long list of HBS graduates that have been amazing operators in tech companies
How is that not survivor bias?
https://www.bloomberg.com/research/stocks/private/board.asp?...
https://www.quora.com/What-successful-tech-startups-have-bee...
What remains to be seen is his degree of financial control, given that Vimeo's parent IAC could presumably spare relatively large amounts of funding for it due to its stake in Match and Tinder. I have high hopes for its stability though.
[0] https://www.recode.net/2017/8/2/16086880/vimeo-subscription-...
I haven't seen any hard numbers, but from my subjective experience and anecdotal data I'd say Soundcloud is closer to Youtube than Vimeo for a number of reasons.
Vimeo isn't focused on the social aspect. It's a platform for pros to share their content in hi quality which is the only reason these pros aren't using Youtube in the first place.
Soundcloud doesn't pretend to be a service for pros. Otherwise why stream at 128kpbs and offer such meager and ridiculously priced plans? Also no pro tools for distribution or even selling music like Bandcamp does.
Soundcloud is focused on the community and social experience much like Youtube or even IMGUR. This is why I believe it hasn't been able to monetize its efforts.
Either Soundcloud starts monetizing with ads or it becomes a real platform for pros.
/s (I feel dirty just for typing the above.)
The streaming at 128kbps IMO has always been an anti-piracy measure; given that those previews are inevitably going to be scraped, make them just teasers rather than the real thing, and encourage purchase (or the cancer that is "Repost and Follow this random irrelevant promotion network to download" ... which is another problem SoundCloud needs to solve).
It begs the question, though - with such a large engineering staff, why has SoundCloud always linked externally for "Buy" links rather than running its own store? It could capture a lot more of the value chain and lower friction-to-purchase for indie musicians. Perhaps the reason was to not be competitive with its initiatives to get record labels (who likely prefer to drive sales through existing platforms for quixotic reasons) on board for SoundCloud Go. But perhaps with new leadership and recalibration, this could actually happen. RIP Bandcamp though... or maybe they just acquire them!
I've never thought about the problem but it should be solvable. If you only stream hi quality to logged users you can track their behaviour.
If they want higher quality they can ask me or hear it when I play out.
Also, IIRC, there is a 'allow high-quality streaming for logged in users' checkbox in the upload editor.
But that would defeat the purpose of streaming services: convenience.
> IIRC, there is a 'allow high-quality streaming for logged in users' checkbox in the upload editor
Maybe for pro users. I just uploaded a file and didn't see that option.
Many of us oppose this level of convenience as it cheapens our art. I'm happy to hand out mp3s or even allow them to be downloadable, if someone wants them.
And it looks like HQ streaming disappeared as a feature, just like communities. Unless it's still on pro, but I wouldn't know since at some point they converted my pro account to a free one.
And mp3 is not obsolete...far from it. 320kbps is still the goldilocks standard among Bittorrent scene, and unlike the current format du jour (what is it now anyway?) it still plays everywhere
This defeats all the practical advantage of the internet removing limitations.
I can't ask you because I don't have an account and will not register one to do so (I actually did once to get in touch with the artist and he gave me shit) and I can't hear it when you play out because I have no idea when and where you play out and we don't even live on the same continent.
Defeating the whole point of its existence points to a non existent future. I used to use soundcloud because I could discover music and artists and download hiqh quality files. I don't go there anymore and am back to discover music and artists on file sharing between people which I've been doing since before the democratization of the internet.
(And before someone points out what appears to be a contradiction with my previous statements, while I think SC is for its users, its original design was much more artist-centric and extended lots of control to the people who create its content)
It sucks that the artist you reached out to decided to be lame, but my experience doing that has been the opposite.
SC still offers a download option, and as long as your track isn't flagged for copyright you can set it and unset it freely, so the lack of ability to download from Soundcloud has more to do with the artists you are browsing and/or Soundcloud's UI.
By the way, I am fully in support of piracy, so no objections here. As a principle it stands for the ownership of bits and against the commodification of art. Piracy encourages individual pursuit, curation, effort, and even creativity. Youtube and its consumption culture value none of these things.
Maybe it will be bought by AOL or yahoo to prolong its agony further.
https://www.theverge.com/2014/1/24/5342300/soundcloud-pursui...
http://recode.net/2014/01/24/soundcloud-has-a-new-pile-of-ca...
https://torrentfreak.com/record-labels-can-remove-soundcoud-...
https://thump.vice.com/en_au/article/4x8dqm/the-great-soundc...
you mean ... Oath
EDIT: I just created an account on Mixcloud and searched for 11 artists i'm following on SC and not a single one had a presence on Mixcloud. I'm calling bs on that.
We lived in the future for a little while there.
It's like Etsy deciding they want to be the next Amazon.
Foster relationships with users makes sense if you want to build a long lasting community and service. But the record industry will attempt to destroy you if you grow too much.
I mean I get why SC went the direction of Spotify, Youtube is going that direction too!
edit: Why the down vote? I was serious - I thought with Youtube Red you could listen with the screen off, am I wrong? Perhaps I misunderstood your screen on statement.
edit2: Well, as others confirmed, it is indeed allowed via Youtube Red like I said. So my post being down voted makes no sense, the OP was wrong. Get your shit together HNer.
edit3: Well, the down vote has been reverted (or upvoted out of it) - regardless, I probably overreacted. To be clear, I don't care about the "Karma" (I try to recreate accounts somewhat often for privacy), I just get irrationally angry when it feels like people try to silence you for an unexplained reason. It's why I hate Reddit.
I flip out if a Youtube video isn't "available in my country", I can't imagine seeing that frequently. My sympathies.
Though, if Youtube was to become "Soundcloud", having Radio specific ads would be a nicely adaptive feature for the "free" audience. However, given that ads are required, screen on vs pay is very reasonable. There is an avenue for screen off, legit and implemented as a feature.
> Making you pay to turn your screen off is not "allowing" it in the normal sense. It's valid for someone to see your comment as wrong.
I disagree, the feature is there, that someone just doesn't like how to access it. Saying something doesn't exist / isn't allowed is a false statement if it does exist. The requirements for being allowed were not being discussed.
> I disagree, the feature is there, that someone just doesn't like how to access it. Saying something doesn't exist / isn't allowed is a false statement if it does exist. The requirements for being allowed were not being discussed.
You are not allowed to park here. And by that I mean you are 100% capable of parking here, parking here exists as an option, but you will be fined $75.
It's valid to see turning off the screen as "not allowed".
You are allowed to park there, if you have the pass. If someone told me I wasn't allowed, I'd assume there was no way for me to park there. If someone told me I was allowed with requirements, then I know I can, if I can obtain the requirements.
However I see your point of capable vs allowed, I just think it's a valid distinction to make. I'd never tell someone that they'd not be allowed to park somewhere, because that's not the complete picture. They might leave, thinking that there's no way for them to park there. That's not true at all, and I'd be in the wrong for misleading them, imo.
It's almost embarrassingly easy to pull a 400 song playlist of the genres I like (outruns and synthwave).
In fact you've helped me remember that I haven't donated in a long while.
Of course, we'll see what they mean by that and how it will be executed, but it sounds like good news, actually.
You don't invest in a company without expectations of ROI
Edit : of course, it seems their doing a downround, so those expectations are not in good shape either.
When a DJ is spinning in a club or venue however using someone else's content is covered by the venue in the form of fees paid to ASCAP, BMI or some other such publishing rights society.
This is not true in many parts of the world.
See:
https://en.wikipedia.org/wiki/Performance_rights_organisatio...
https://en.wikipedia.org/wiki/List_of_copyright_collection_s...
https://www.ascap.com/help/international/affiliated-foreign-...
Its up to the artist to register with a PRO or to affiliate with a publisher that will do so for them. ASCAP despite the A in the name will collect performance rights worldwide and anyone that meets the basic requirements is welcome to join regardless of what country you live in. See:
http://blog.songtrust.com/uncategorized/ask-songtrust-publis...
Soundcloud needs a blanket "no music published by a major label is permitted" There are of course copyright issues on remixes/whatnot but those really needs to be worked out in a court of law, in favor of producers.
Wasn't this a necessity though due to some of the content hosted by SC being owned by the 4 major record labels?
I understand that the goal of any business is to make money be profitable, but SoundCloud went from being a resource for independent musicians to an also-ran in the subscription music streaming race.
The company will collapse if nothing is done. The only downside to trying something new is that the company might collapse a little bit sooner if the new direction doesn't work out. On the other hand, there is a chance the company can be saved, so it seems like they might as well try it.
I wonder how many of us who are so fast in judging have really run a mid- or late-stage startup and know what they are talking about.
I know just one thing: Leading and managing people is a super tough job. We are not talking about leading a small team. No, it's leading a corporation and worse, managing investors who are chasing you night and day and playing power politics for years while being the nice daddy VC writing witty blog posts. And don't forget the three labels who blackmail you to death but are shareholders at the same time. Stuff nobody knows. We only know that Alex went to Burning Man and fired 173 people. So he must be a bad CEO having no clue of music, product and leadership. Of course.
It's easy to give good advice from outside. But it's so hard to understand what actually happens inside. All of us who managed just a small company know what I am talking about.
Managing machines, code or even a Kubernetes cluster is easy as pie compared to what the SC founders were going through the last years. Machines are predictable, humans are not. Just read Machiavelli's The Prince and get a notion of what people are willing and able to do to deal with other people. Backstabbing is their daily business and Game of Thrones is not that far away anymore from the life of a venture-backed CEO.
Not that I like Alex and Eric very much or what they did. Honestly, I don't care at all, I find SoundClound's products and the repetoire rather mediocre and I don't believe in online music as a healthy business model.
But I don't know any founders in Europe and in Germany who raised that big funds and could keep control for that long and the product still in an ok shape. Look what Travis is going through right now. For some who have never been in such a position, they just can't imagine how high the pressure and extreme the psychological stress is, how many ultra aggressive sharks are floating around you just waiting for one single mistake. Then, loosing control of everyhing happening in and around your organization happens quicker than you can think.
So many beautiful ideas are destroyed by the greed and avarice that underpins 'fiduciary duty to shareholders' and their expectations of unnatural and unhealthy growth.
lol ... waiting for him to talk about the rampant pedophile problem on Kik
It's sad that the execs get free pass on ethics violations like these. And there are no consequences for these execs. And I don't understand why after such violations people still stay with the company.
This way it doesnt alienate its users but in turn empowers and supports those that people like?
Just my two cents, I could be totally wrong or that they do this already, happy to hear any feedback on this.
I haven't heard of Audiomack before and I checked out their website right now but I was inspired for the music management idea after seeing a lot of Youtube music videos from indie music artists linking their SoundCloud in their descriptions so I see SoundCloud more filling in the gaps better because its what musicians are sort of trying to do with SoundCloud but hacking it together in a rough way.
Edit: As well, I had a friend who was producing music and singing with some rap and RnB who heavily relied on SoundCloud and I noticed he basically self-funded his music videos by holding parties and filming it as well as promoting his music by literally going around and playing it. I think young and upcoming musicians struggle with entering the mainstream and SoundCloud can help due to its heavy base of indie or not-yet mainstream musicians and listeners.
Also, how has BandCamp done so well as an independent music service? Any lessons to learn there and to apply to SC?
I mean, maybe I'm hanging my ignorance on the clothesline here, but the product is built, yea? Do they really need that massive warehouse in the Tenderloin, AND their global offices?
Twitter on the other hand could never have been built without being venture funded from the beginning, the growth of their product was only possible because it could scale and have the kind of uptime it did, and that venture funding allowed them to hire the engineering talent that made it all possible. Maybe now, twitter could lay off 90% of their staff and figure something out, but it seems pretty unlikely that would be the case.
Patreon could help, but not every artist on SC is fine with staying indipendent when a big label approaches them, at least in the space I follow (electronic/EDM), simply because the real money is in live shows, and you get bigger shows if you have bigger "shoulders"
I think bandcamp is doing well because it's a different service (store first), for different customers (people that mostly can't care less for popular music), where the music uploaded (almost?) never is in copyright gray areas...
Maybe you're speaking statistically here, but every time I find an artist's music on SC, I end up finding 3-5 more artists like them that I really like. So, maybe it's anecdotal, but I certainly enjoy SC for its discovery aspects.
Instead they made a conscious decision to push ahead with bizarre business strategies and without providing any meaningful functionality updates to their core service (I even think they regressed in this regard, the dumpster fire that was song reposting was the final nail in the coffin for me).
Honestly I think the service needs to make a graceful exit to let another service emerge who actually wants to push things forward for developing new artists.
Looks like it expires soon, and even so it's been restricted to a shopping cart model.
Gonna apply for the patent on two-click purchases...
Absolutely, repost spam (particularly repeat reposts of the same song so it would stay at the top) making the feed unusable was what drove me away. Then all the random bugs that persisted for ages, and frequent weird/unnecessary UX semi-redesigns. One bug I recall is that going to a song page then back to the feed would never put me back at the same point in the feed.
Exactly.
SC was too focused on the social aspect instead of trying to be a useful tool for music/audio pros.
> Honestly I think the service needs to make a graceful exit
Couldn't agree more.
If you mean financially, it's because they take a 15% cut of an artist's sales, up to $5k, after which it drops to a 10% cut and they also take out CC processing fees.
IMO, if SoundCloud were smart they'd find a way to team up with BandCamp right away. Unfortunately, I don't know what BandCamp would get out of it.
I have to wonder why the VC sunk more money into SoundCloud. Do they see an opportunity we don't? Or is it politicking? Hard to tell.
Soundcloud Go turned them into a competitor with Spotify, but that was never their forte in the first place. They just saw it as a way to possibly make money. I think they need to focus on the community aspect of things, and see themselves as more of a social networking tool centered around music rather than yet another music store/streaming service.
But, you're point about being able to upload "anything" to SoundCloud stands. It was a place for remixes, demo tracks, podcasts, etc. You aren't able to upload just anything to the music streaming services. (need album artwork, etc)
And your last paragraph is spot on. I'm surprised we didn't see them release their own mobile OS and phone /s
They were completely different services for different artists and different audiences, until SC tried to force a premium service. That's when Spotify comparisons started and drew users away.
An anecdote - I won't pay for more than one music subscription on a monthly basis. I won't even choose apple music or tidal or amazon music (if it wasn't included with prime) over Spotify. Why would I pick soundcloud when it has a smaller catalog and a worse UX?
Kinda a funny example, since nowadays I mostly think of eBay as an also-ran to Amazon.
The amount of art that would be lost if soundcloud actually shut down is tremendous. There's a public interest in keeping it around, in my opinion
It would be funding a distribution platform for art. Most of the music on soundcloud is free for anyone to listen to. That's a public benefit, in my opinion.
This comparison is like saying "if all we do is capture 1% of a huge market, we'll be millionaires!"
There's quite a bit more to it than simply saying "Build one fewer JSF boondoggle, please. We need to prop up [pet project X]." Considering that comparison is used hundreds of times daily, I might add... it's not exactly scalable.
The F-35 is a boondoggle to say the least but I actually think the ROI on it is considerably better than propping up SoundCloud.
Of all the things my tax dollars get spent on, promotion and preservation of the arts is an area where I really wish we'd spend more. It's not like we have a shortage of bombers.
Such a centralized and proprietary service fate is to disappear eventually taking down everything with it.
You want this 'art' to stay around, post it directly on archive.org
I... had never actually thought of that before.
- It's quite common for investors to push hiring more people as a way to get more stuff done. The general refrain you will hear from many investors on how to (move faster|fix problem) is to hire for it.
- The default thing to do with capital to invest is to acquire/hire.
I guess to summarize, staying lean just isn't a priority for these companies or their investors. The expectation is enormous growth or failure. The reality is often quite more nuanced.
The crazy thing is that it should be exactly the opposite. People should get more credit for achieving X with as few people as possible. Instead it works the other way round.
a shell script to ease playing music from Digitally Imported (DI.FM), SKY.FM, and JAZZRADIO.com Internet radio stations
I thought everyone was moving to Flash alternatives nowadays?
Edit: Tons of playlists. No vocals.
And no, for me a lot of the stuff I listen to is not on Spotify.
As for ads, can't you pay for DI?
Discovery and 'play related' are totally broken on Soundcloud compared to Spotify.
On SC, you can follow hundreds of users and get inspiration from them but for me this never worked or matched my taste in a consistent manner.
So either you listen always to the same tracks the eight hours or listen to some unrelated tracks or must fiddle around with SC's also broken UI.
Independent? I beg to differ...
pre-money valuation: $150M
investment : $169.5M
post-money valuation: $319.5M
So the investors got about 53% of the company for $169.5M.
The company is "worth" the same as it was before, plus $169.5M new cash in the bank.
In return, the investors received newly-issued shares at a price based in the pre-investment valuation of the company.
So there's no paying any "difference"; only increasing the valuation of the company by injecting new cash into it and creating new shares.
I don't see it listed in either the TC article or any of the top level links.
As for runway, hard to guess b/c the new CEO will presumably make some changes.
That and there are going to be some seriously restrictive terms to that money. Also I think part of it is used to pay debt.
Just like Twitter, if the service changes too much it might lose its only asset (the community) but if it doesn't change it will sink.
That would be a differentiator between them and uploading to youtube with a static image.
I think they already lost most of the local support here with the layoffs. The VCs might even be happy that the talent that was tied up in SC is now on the free market and available to help build the next "big" startup.
They will probably fire more employees, do 2 or 3 pivots to different business models and when that doesn't work out the company will die.
Download your favourite content now, before that value lever has been pulled, and it's too late.
I will mourn the loss of SC as it has been a superior product to Spotify, but it's all about two things:
1. Does it have the music I listen to? 2. Is it obnoxiously in my face trying to make money while I'm trying to concentrate with background music?
Right now, they're starting to ruin criteria 2 and there isn't much reason to be loyal to the brand. The only problem for me now is, that whatever alternative I find is. Inevitably it will befall the same fate.
That's what they tried (and failed with), yes. They added it pretty late, but the retargeting towards this model IMHO did a lot of damage.