SOUNDCLOUD: 25 Million plays and zero dollars

In December 2012, as part of a major redesign, SoundCloud introduced a feature called the repost. Similar to Tumblr’s reblog or Twitter’s retweet, reposts were designed as a way to help new music spread virally. But from the start, artists abused the feature by constantly reposting their own tracks, pushing them back to the top of their followers’ feeds every few days. Artist collectives made agreements to repost one another’s songs, and eventually, a popular music blog was caught selling “slingshot” packages that included paid reposts. Fans and artists alike loudly complained — but SoundCloud, which was busy fighting an existential threat from major record labels, didn’t address the abuse for nearly three years.

In the meantime, artists and fans alike flocked to rival services like Spotify, Google, and Apple. Ask the artists who first turned SoundCloud into a premier destination for discovering new music and they’ll tell you that they abandoned it only after years of neglect on the platform. Interviews with artists, producers, and managers illustrate how SoundCloud squandered early enthusiasm for its service with a messy transition to a paid business that ultimately made little money for artists — or SoundCloud — while driving away the listeners and creators that were its lifeblood.

SoundCloud declined to comment.

Founded in 2007 as a kind of YouTube for audio, SoundCloud became popular among a wide swath of outsider artists. It helped fuel the rise of EDM and the raw, grunge-inspired genre that came to be known as SoundCloud rap. The company’s monthly audience grew from 11 million in 2011 to 175 million four years later. Along the way, investors came to value it at $700 million.

“Early on, I had a website with 15 megabytes of storage that I somehow crammed low-res MP3s onto,” says RAC, a Grammy award-winning DJ and record producer. “SoundCloud was the first [music-sharing platform] to take off in a tangible, life-altering kind of way. It initially solved the hosting issue. This was a big deal in 2007–2008. It’s almost laughable in the age of infinite cloud storage, but it was very expensive to host your music online. As Myspace was failing, there was a huge vacuum for a simple and easy music player.”

SoundCloud experimented with a variety of business models, including content-related ads and charging the creators for premium accounts that host more audio. But much of the audio uploaded to its servers contained derivative copyrighted material: DJ sets, mashups, and unofficial remixes using songs the SoundCloud artists didn’t have rights to. As those tracks racked up millions of views, record labels pressured the company to crack down. While the company worked to develop its paid platform, the service began to fray around the edges. SoundCloud’s increasingly confusing system of paid tiers caused contention for creators and their teams: unwarranted song takedowns ruined PR for new releases, labels pulled music off SoundCloud against artists’ will, and those who had helped make SoundCloud a force from the beginning now found it had simply stopped paying attention to their needs.

Now SoundCloud’s future is uncertain. Acquisition talks from both Twitter and Spotify fell apart. In 2014, Twitter said its reasoning was that “the numbers didn’t add up.” Sony pulled out of streaming agreements in 2015, citing a similar concern of “a lack of monetization opportunities.” The company’s valuation is sinking, and on July 6th, it announced it had laid off 173 employees — 40 percent of its workforce — and shut down its London and San Francisco offices.

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