Today, SoundCloud announced that they will now be driven by advertisements. But before we talk about the implications, let’s look back on the company’s history.
For the past half a century, Berlin based SoundCloud.com has grown into the “hip” music media empire, along with Spotify. For those of you unfamiliar, SoundCloud is a music sharing service that allows users to upload any type of audio media for free. And not only is uploading free, but also streaming comes at no cost and can be done so without an account of any kind. SoundCloud has found its niche with indie rock bands, and pop singers, but is particularly popular with “fast-moving genres” such as hip hop and EDM. SoundCloud’s easy access allows artists in these genres to release music quickly and on a large-scale. For example, several days ago rapper J.Cole used the SoundCloud platform to release a tribute song to Michael Brown, the 18-year-old who was killed in Ferguson, Missouri. SoundCloud and its upload system allowed J.Cole to quickly release the song while the violence in Ferguson was still fresh– something that he could not have done on other platforms (it could take a long time to get a song approved for Spotify and iTunes).
For many small artists without record labels, SoundCloud has become the go to publication platform. For example, current New Zealand superstar Lorde found her start on SoundCloud after uploading her track “Royals” to the site a few years ago. Even with competition from sites like iTunes and Pandora, SoundCloud has managed to gather a massive following with its unique and exclusive content. About 175 million people use the site every month, which is 4 times the amount of Spotify’s monthly user base. SoundCloud’s allure comes from its easy access for small artists (many songs on SoundCloud can’t be found anywhere else), large user base, and free services.
However, the site may now be digging its own grave.
SoundCloud has always had a complex relationship with large record labels. On one hand, SoundCloud serves as a promotional site for artists by serving as a platform to show off new songs and gain exposure. Even remixes of hit songs, while bringing attention to the ‘remixer’, also bring attention to the original song (for example, a remix named “Clean Bandit – Rather Be (Cash Cash Remix)” brings attention to both Cash Cash, the remixer, and Clean Bandit, the original artist). On the other hand, many large artists also find it frustrating that they can not profit off of their SoundCloud. And while, in the past, SoundCloud has sided with the small music producers/remixers, the pendulum is swinging to protect the large music labels.
For most of its history, SoundCloud has had relatively lax copyright enforcement, which has allowed many users to post ‘remixes’ of popular songs. However, within in the past 12 months, SoundCloud stepped up its copyright notification system. Most notably, in June, a large controversy arose when dozens of remixed tracks by the American superstar D.J. Kaskade were removed by SoundCloud and record labels. Left and right, SoundCloud’s automatic copyright takedown system began to anger many music producers who had previously been making remixes for years.
And today, after long talks with record labels about licensing agreements, SoundCloud has decided to roll out advertisements to appease large record labels. In an email sent to users, SoundCloud announced its new “creator parter system”, which is a system that will pay music artists for their music based on the amount of plays (similar to Spotify). However, to deal with the cost of paying artists, SoundCloud will also be rolling out advertisements across the entire site. SoundCloud will also allow paid-premium accounts to skip the ads (current paid premium accounts give more storage space among other perks).
Will users accept the new, “listen to ads or buy a premium account” business model? In short, the answer will be no. The allure of SoundCloud came from its openness to the “little” guy– with SoundCloud removing many remixes and mashups in addition to the new ad driven profit system, I’m just not sure if the site will be able to keep its “hip” factor. Many people may look for other sites to serve as a replacement to SoundCloud.
How will the company deal with the risk of alienating its core user base?
As the NY Times stated, “According to Alex Ljung, SoundCloud’s CEO, the artist-centered history of the company will help in that regard. ‘People know that SoundCloud is very much a creator platform,’ he said. ‘They understand that if they hear an ad, then a creator is getting paid for it as well.'”
While some contest that revenue/advertisements are needed to make a business profitable, SoundCloud is currently playing a dangerous game. SoundCloud already makes money through premium accounts which gives artists access to more storage, analytics, and other perks. Are ads truly needed? Or is this a way to “buddy up” with large record labels? Well, in July, SoundCloud was in talks with Sony, Universal Music Group, and Warner Music for a possible 5% stake in the company.
I just worry about the small producers– The small remixers and mashup artists who make SoundCloud so special. If SoundCloud becomes intertwined with the likes of Sony and UMG, I fear that the countless remixes that make up SoundCloud today will be removed. People of hidden talent will become less likely to be uncovered, and the interests of large record labels will come first.
So no, SoundCloud, we do not want your ads. Your site is a platform for all music artists, whether it be Avicii or a small remixer. Focusing on “paying the large artists”, in addition to your new copyright system, runs the risk of alienating the large user base you have. Because honestly, many of us don’t use your site to find already popular artists. We use it to find those small, unknown-but-amazing remixes.