How SoundCloud Has Disrupted The Music Industry

SoundCloud Application Icon, Amazon, All Rights Reserved

Social media platforms are constantly transforming how individuals are interacting over the internet. These social media platforms have had a myriad of impacts on society, from the creative industry, politics and businesses. Platforms such as Facebook, YouTube, Twitter and Tumblr all attract the attention of content creators as well as the average consumer. However, these platforms have primarily focused on visual stimulation and little has been offered for audio content creators. Attempts have been made to create social systems for audiophiles due to the strong presence music has in modern society. The most popular and arguably the most successful website for social audio, SoundCloud, exhibits multiple elements that have transformed how music is perceived and discovered in society (Chamberlain & Chamberlain, 2015). Soundcloud has been paramount for the discovery and success of numerous famous artists, content creators and producers. As a result, Soundcloud has had such a prominent impact on the creative industry and has left many to abandon the accustomed norms of talent hunting, music promotion and production. This essay analyses the social media platform, company and service; Soundcloud, and how it has transformed our economic, social and cultural relation to music.

 

The explosion of peer-to-peer sharing in society started in the late 1990s and early 2000s, for audiophiles there weren’t any dominant platforms for sharing music. During the 2000’s online platforms didn’t prioritise the support to dedicated social audio functionalities and instead integrated them as a minor feature of their platform. Uploading, playlist building, artist promotion, and streaming weren’t focused on by social media giants such as MySpace, Friendster and AOL. As a result, the introduction of SoundCloud revolutionised the social media music landscape (Hansen, 2011).  As a social media platform Soundcloud has revolutionized how music is distributed in the world with its widespread reach over the creative market.

 

Creating an account is costless with up to three hours of audio may be uploaded with a free account; paid accounts have larger upload limits and increased customizability options (Giannetti, 2014). Soundcloud is a social media platform on which users post and share audio compositions. The website graphically transforms the composition file into a visualisation of a cloud that users can comment on. Basic statistics can also be tracked, indicating how many times a user’s track has been listened to by others. The platform allows musicians to collaborate, promote and distribute their music. Soundcloud can help users publish and copyright their content. Users can choose to make their content available through a creative commons license. When an audio file is uploaded onto Soundcloud the content can be shared through other social networking sites like Facebook, Myspace and Twitter (Reed, 2017).

 

SoundCloud’s conception and history: 

 

Soundcloud was conceptualised in Stockholm Sweden by Swedish sound designer Alexander Ljung and Swedish artist Eric Wahlforss. Both Wahlforss and Ljung were doing engineering studies in Stockholm and were both involved in music production as well as sound designing. The platform was founded in Berlin in 2008, and quickly became the hub for local electronic musicians to share tracks, mixes, ideas and socialise.  By 2011 Soundcloud was rapidly expanding growing from 10 million registered users to 40 million by 2013. As of late 2014, SoundCloud was reporting figures of 175 million monthly listeners with significant user populations in North America, Europe and Southeast Asian countries such. Its creators hailed it as the “YouTube for audio,” and its uses have spanned a number of creative and commercial fields. Primarily used as a distribution medium by aspiring record labels, major-label musicians, podcasts and even government services (Weverbergh, 2013).

 

In 2017 SoundCloud began to have problems due to a number of legal and financial reasons. In August 2017 the popular social media platform announced it was laying off 40 percent of its workforce, and reports claimed that the firm only had enough revenue to survive for a few more months. Soundcloud underwent major restructuring that saw to the lay off more than 170 staff with the remaining team situated in the New York and Berlin offices. Many musicians and audiophile enthusiasts that started their careers on Soundcloud rallied behind the platform to show their support. Reputable artists such as Chance the Rapper and Post Malone created awareness about SoundCloud’s struggles that assisted in catching the eye of investors. On September 2017 SoundCloud received an investment of $170 million dollars from the Raine Group and Temasek (Satariano & Shaw, 2017) .

 

To save the company the deal let go of many of the early investors in a corporate restructuring, including CEO and co-founder Alexander Ljung. With its restructuring in 2017 Soundcloud has continued to operate and transform the creative industry (Giannetti, 2014). These business deals that Soundcloud has had to fulfil has led to the constant changes in how the business is managed. Originally Alexander Ljung and Eric Wahlforss launched the website with a small team, without the funding or initial investment from third parties. As a private company Soundcloud is owned only by a small number of investors and isn’t available for the public to buy shares. SoundCloud’s first major funding was 2.5 million Euros a series of funding from Doughty Hanson Technology Ventures (Bloomberg, 2018).

 

The events that transpired in 2017 led the company to announce that CEO Alex Ljung would step down from his position to be replaced by former Vimeo CEO Kerry Trainor. Trainor was reputable for steering Vimeo through its expansion in usage, revenue and shareholder value.  Trainor was picked out by the board and key investors who believed that Trainor suitable to fill the role and recuperate the companies loses. In conjunction with the investment and veteran digital media CEO Kerry Trainor, Michael Weissman also joined the SoundCloud team as a Chief Operating Officer further alienating the original founders. Ljung and Wahlfross still remain on the board and heavily influence the direction the company will take in the future. Both remain with the company Ljung as a Chairman on the Board and Wahlforss as the Chief Product Officer. In addition to the role of Chief Executive Officer, Trainor will also join SoundCloud’s Board of Directors.  The 2017 investment revitalised SoundCloud and ensures a strong, independent future for the company, funding deeper development and marketing of its core tools used by millions of audio creators (Satariano & Shaw, 2017).

The Sound of Social: The Story of Soundcloud, Interloper Films, Youtube

SoundCloud’s effects in the music industry:

The reason as to why Soundcloud has continued to attract investors is because of the enormous potential it has to change the way music is discovered and share throughout the world. It is home to just as many famous artists and up and coming stars due to SoundCloud’s innovative simplicity and its understandable layout. There are numerous reasons as to why SoundCloud has had transformative effects on cyber culture and society. It’s home to multi-platinum recording artists, random kids recording beats in their bedroom, and everyone in between (Horn , 2014). Artists can receive immediately distribute their music and receive feedback: What makes SoundCloud so transformative is that offers tools for musicians to create and distribute their content online in a platform connected to the world. Creating an audio clip on SoundCloud requires no expensive record deal or distribution plan to be distributed and listened to.

 

Statistically it is reported that every minute, 12 hours of new audio content is uploaded to the Soundcloud. Up to two hours of content uploaded by a user is completely free of charge and Soundcloud includes packages to increase the amount of content that can be uploaded.  For most people that means SoundCloud is free to use and free to enjoy. Even without uploading content users can still comment, share, embed and interact with one another increasing awareness for both the site and artists (Hubbles, Lee , & Mcdonald, 2017). Culturally Soundcloud has had such a significant impact on the new generation of music artists with many well know performers starting from the social platform. Examples of such artists include; Chance the rapper, XXXTenaction and Post Malone who have each respectively influenced millions with their music, and without Soundcloud acting as a pseudo record label their talents could have been overlooked. These are a few of the numerous cultural implications that SoundCloud has had on society.

 

Image: Audience, Anna M. Weber, CC0 License

 

Bridging the gap between artists and fans: Acting as a catalyst for social interaction, SoundCloud is able to form communities that are connected through mutual interests in audio entertainment. The community and culture around SoundCloud has also has helped dedicated fans connect to artists like never before and share their content. Before SoundCloud became a mainstream platform, artists required third parties to distribute and advertise content.

A platform for record labels and artists to meet:  Discovery is one of the most difficult phases to achieve in the music industry, especially for niche artists.  Soundcloud enables producers, influencers and record labels to interact with artists in real time, allowing for more work to be recognized and funded. Mad Decent Station and influential producer/DJ Diplo have the Soundcloud page Diplo Approved, where tracks are consistently shared from up and coming producers in electronic music. Soundcloud creates accessibility by enabling music artists to collect an audience with whom they can share their art. SoundCloud works with major labels on licensing deals to assist in the funding and support for popular Soundcloud artists (Horn , 2014).

Give users free access to audio content: SoundCloud has quickly evolved from more than just a niche platform for musicians looking to be discovered. The spectrum of genres and content on Soundcloud enables users to find new content from underground musicians through the latest tracks from more notable artists like Beyonce and Drake. However, for the up and coming artists SoundCloud continues to be the where music is posted before landing on competing platforms such as Spotify and iTunes.

 

SoundCloud as a business:

 

Because of how dependent some artists have become on using SoundCloud as their primary social platform advertising and monetisation was an inevitable integration. Soundcloud has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate: music artists who want to distribute their music and consumers who want to hear it (Jefferson, 2017). Since it’s conception in 2007 SoundCloud’s revenue business model has revolved around charging content uploaders for advanced features to improve their respective channels. The two primary attractions to pay for the service were; more hours of uploading as well as data and statistics analyses. Users are offered a “Try and Buy” offer, allowing them the benefits of premium users for one month in exchange for your payment information. If the subscription isn’t terminated before the end of the month, then users are charged for the next month’s usage and enter an automatic renewal on the subscription. In 2014 SoundCloud announced a shift in the business model and launched advertising on the platform for the first time. SoundCloud works with its key partners to produce promotions in order to assist in their presence in the market. Major contributors and partners include Amazon, HBO, Temasek Holdings, The Raine Group, Tennenbaum Capital Partners and Kleiner Perkins (SoundCloud Overview, 2018).

 

A simple visualisation of the SoundCloud ecosystem. The author.

 

SoundCloud has two revenue streams firstly there are the subscription revenues these are the artist subscriptions and the consumer subscriptions. The artist subscription charges content creators to upload and share their music on a monthly or annual basis. Whereas the consumer subscriptions charges consumers to access the music provided by artists. The basic edition is free, but may contain advertisements and requires constant internet connection. Finally, there is the revenue received from advertising. Profits are generated by charging to third parties to advertise on the company’s platform. These ads can range from audio, images and sponsorship opportunities (Giannetti, 2014)

 

SoundCloud’s biggest issues arise not only from its history of lack of funds but also through the regulation of intellectual property and copyright. With more individuals flocking to the platform to release content, SoundCloud is faced with the challenge of assessing what material inhibits copyright infringements. Most of SoundCloud’s earliest legal battles were against major labels that objected to content creators mixing their tracks without legal consent, as well as artists that posted material without the proper authorisation. The only regulatory debates that surrounded SoundCloud were copyright and creative commons issues and SoundCloud has since updated numerous terms and conditions to their service, integrating their own copyright checklist similar to competing social platform YouTube (Sisario, 2015).

 

 

SoundCloud has quickly become the most popular audio sharing platform over the past half-decade. It has been well received, particularly by the youth which is apparent from its exponential growth. SoundCloud has transformed how music is distributed, increasing the number of individuals willing to attempt publishing their own work hence expanding the music industry. SoundCloud has levelled the playing field for aspiring creative artists all around the world, and those who have succeed on SoundCloud will continue to carry on its importance.

References

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Careless, J. (2016). Pandora, Google Play Music & SoundCloud. GM Journal, 20-23.

Chamberlain, A., & Chamberlain, M. (2015). Understanding social media and sound: music, meaning and membership, the case of SoundCloud. Digital Music Research Network One-day Workshop 2015 (pp. 1-2). London: Queen Mary University of London.

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Hansen, D. (2011, December 19). How Alex Ljung Conceived SoundCloud And Plans To Make It Rain. Retrieved from Forbes: https://www.forbes.com/sites/drewhansen/2011/12/19/how-soundcloud-plans-to-make-it-rain/#79feaa83277a

Horn , L. (2014, June 17). How SoundCloud Changed Music Forever. Retrieved from Gizmodo: https://www.gizmodo.com.au/2014/06/how-soundcloud-changed-music-forever/

Hubbles, C., Lee , J., & Mcdonald, D. W. (2017). F#%@ That Noise: SoundCloud as (A-)Social Media? Proceedings of the Association for Information Science and Technology, 179-188.

Jefferson, G. (2017). SoundCloud unveils $4.99 mid-tiered music offer. Arlington: USA Today.

Maxwell, M. (2015). Machine Tool Operation. (Producer). (2012–2014). Weekly Indie Music Podcast: Independent Music from SoundCloud Users, Episode 54. Length: 20 minutes. . BEA , 348-351.

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Satariano, A., & Shaw, L. (2017, August 12). SoundCloud Gets New Life With Fresh $170 Million Investment. Retrieved from Bloomberg: https://www.bloomberg.com/news/articles/2017-08-11/soundcloud-gets-new-life-with-fresh-170-million-investment

Sisario, B. (2015, August 27). SoundCloud Sued for Copyright Infringement by PRS for Music. Retrieved from The New York Times: https://www.nytimes.com/2015/08/28/business/media/soundcloud-sued-for-copyright-infringement-by-prs-for-music.html

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Weverbergh, R. (2013, April 24). SoundCloud co-founder Eric Wahlforss: “How we built SoundCloud”. Retrieved from Whiteboard: http://www.whiteboardmag.com/soundcloud-co-founder-eric-wahlforss-berlin-how-we-built-soundcloud/

 

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