SoundCloud Accepts $170M Rescue, Taps New CEO
The struggling digital music service secured a fresh round of funding that assures SoundCloud will remain independent.
The SoundCloud death watch has ended.
The struggling digital music service today secured a fresh round of funding that assures SoundCloud will remain independent, even as a new executive team takes over to steer the service into the future.
The Raine Group, a boutique merchant bank, joined with the Singapore-based investment company Temasek, in leading a $169.5 million investment round that infuses SoundCloud with much-needed cash.
Former Vimeo CEO Kerry Trainor succeeds founder Alex Ljung as chief executive, and Michael Weissman, another former executive at the video platform, was named SoundCloud's chief operating officer.
"All of this together — the capital, the capital partners — with Kerry and Mike joining our team — it puts our company in a really great position to stay strong and remain independent," Ljung said in an interview with Billboard. "We see a strong, independent future for the company."
Ljung and SoundCloud co-founder Eric Wahlforss will remain with the company they founded a decade ago. Ljung will serve as chairman of SoundCloud's board, and Wahlforss as chief product officer.
Trainor told Billboard his experience running Vimeo — a platform created by filmmakers to share and monetize their videos — would inform his work at SoundCloud, as he places greater emphasis on developing tools for musicians, DJs and other creators.
That's the approach Trainor used at Vimeo: charging filmmakers to use its video-sharing, marketing and analytics tools. When he left the IAC/InterActiveCorp unit in June of 2016, he counted among his accomplishments tripling the video-sharing site's monthly users to 280 million and bolstering the number of paying subscribers to 710,000.
Musicians already turn to SoundCloud to invite unusually public collaborations on unfinished works, promote new songs — or get private feedback before releasing a track to the world. Trainor said this open artistic experimentation gives the platform a unique identity in the digital music space.
"SoundCloud is the largest open audio platform in the world," Trainor said. "Millions of creators choose these tools to share their work with the world — that will remain at the focus and center of the company."
SoundCloud's Pro and Pro Unlimited subscription services provide insights into which tracks are most popular and where. The Pro service, which costs $7 a month, provides basic stats such as play counts and likes, see plays by country, turn on or off public comments and upload up to six hours of audio. The Unlimited offering, for a $15 monthly fee, lifts the cap on the amount of music that can be uploaded and provides more specific analytics.
Trainor hopes to increase the number of creators who pay to use SoundCloud Unlimited's service by adding an even more robust creative toolkit.
Raine partner Fred Davis, a former music industry attorney who represented several top acts before entering investment banking, including Kanye West and the Black Eyed Peas, said artists feel a fierce loyalty to SoundCloud — and worry about its fate.
"If I could show to you the number of people who have been calling us, expressing fear about it going away, you would be shocked," said Davis, who will join SoundCloud's board.
This tight connection with the artist community, together with SoundCloud's collection of original recordings and evolving works, attracted Raine's investment, despite the recent layoff of 40 percent of its workforce and speculation that it would run out of money by the end of the year.
"It's crystal clear to us that what SoundCloud has that is truly unique to its service is a unique set of rights and content that are available to listeners," said Davis.
Ljung declined to talk about contact from musicians throughout SoundCloud's "death watch." But he said the drumbeat of articles, speculating about the "big gaping hole" that would be left in the music world should the service disappear, shows "people are very passionate about seeing it succeed."
The decision to lay off so many talented colleagues was "very painful," Ljung said, but that it was the right thing to do to ensure the future independence of SoundCloud. He said that SoundCloud is at the cusp of a turnaround, having invested years building out the technology platform and amassing a large user base.
SoundCloud last reported some 170 million users.
Over the past 12 months, SoundCloud said it has seen double-digit gains in creator subscriptions, uploads, listening time and listener subscriptions. Total revenue has more than doubled to more than a $100 million annual run-rate this year.
"There is only one SoundCloud. It's unique. We just closed out the first decade and created a really unique platform that impacts global music every day," said Ljung. "I'm really excited about the next decade."
This article first appeared on Billboard.com.