Soundcloud’s $1 Billion Evaluation Means Users Will Have to Start Paying

Every few weeks the popular music streaming site, Soundclound, pops up into circulation, and rarely does it bode well for users. It would seem that of late, the Berlin company has been scrambling for a way to bolster its revenue to keep up and stay relevant against the deep-pocketed competition of Spotify and Apple.

Where Soundcloud differs from its competition is from whom is paying to use it, and that makes all the difference. On one hand we have Spotify, who hosts over 50 million unique users a month and from which 12.5 million of those users are paying $120 a year for unlimited access to the service Spotify provides. On the opposite hand, there is Soundcloud. Soundcloud brings in the majority of its income via uploaders and content creators, who pay more money to have more volume of uploads.

Soundcloud has recently announced that it will begin showing ads to listeners, which stems on top of displaying the promoted content that has plagued the top of our feeds over the last few months. Yet even though Soundcloud can boast its popularity amongst music streaming services, many of the larger record labels are hesitant to show their support. Universal Music and Sony have shown great interest in backing the company, but soon withdrew from any definitive contracts due to Soundcloud’s consistent struggle to find avenues of monetization within their service.

Warner Music seems to be the only major music division that wants to stay on ship as rumors fly across the internet that Soundcloud is sinking. Holding a small stake in the company, as well as licensing agreements with selected tracks, they gain access to a handful of revenue streams that Soundcloud has begun to capitalize on.

As 2014 begins to wind to a close, Soundcloud has hired on a handful of brand new faces that will be in charge of the financial end of the business. With a staggering evaluation and a chunk of ad revenue, the company is set to explode into the new year with enough leverage to bring them over the $1 billion dollar mark. The only question is if its fan base will stay loyal to the service if they are required to pay for it.

Via Wall Street Journal