This week, SoundCloud published a financial report that laid bare the company’s recent earnings, and it wasn’t pretty.
Despite earnings of $15.37m, SoundCloud lost a total of $44.19m in 2014. Some of that was plugged in 2015 by $77m of investment, but company auditor KPMG said in the report that the need for continued investment represented “a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.”
“Over 18 million creators are using the platform, sharing well over 110 million tracks, and reaching 175 million monthly active listeners”
SoundCloud has since reached a deal with Universal Music Group that expands the catalogue of music it’s allowed to host, but the agreement is far from the end of the company’s problems. Account takedowns plague the service’s users, and sites like Bandcamp and Mixcloud offer viable alternatives that get more attractive by the day.
1. SoundCloud is spending considerably more money than it makes
The losses revealed by SoundCloud are damning enough, but even more difficult to believe are the company’s wage figures. Despite operating at a considerable loss, the company has been expanding at an exponential rate: staff numbers rose 21% to 236 people and employee wages increased 42.5% to €17.9m in 2014, making a staggering average wage per employee of €79,980.
CEO Alexander Ljung’s official line is that “over time, SoundCloud will become a financially sustainable and profitable platform,” but it’s difficult to see how such losses could support the opening of a lavish New York office in 2014. Every tech startup needs expenditure to get off the ground, but there’s no indication that SoundCloud’s figures are anywhere close to balancing any time soon.