SoundCloud Losing Money Fast As Record Labels Apply Licensing Pressure

More SoundCloud pain.

Tech Times:

Digital Music News has reported that SoundCloud is hemorrhaging cash so quickly that it might actually run out before the end of the year, unless it can convince a bank or other investment group to hand out more dough until it can figure out a way to monetize its business model. This is despite a recent report valuing the company at $700 million dollars.

One reason SoundCloud is burning through money so quickly is the huge legal expenses the company is incurring. Record labels are growing impatient with talks intended to legitimize the service through licensing deals, with most labels currently uncompensated for the content streamed on SoundCloud. The record labels are threatening to sue the company if talks don’t progress faster.

I always tell labels / musicians that there’s a danger in making a site that’s outside of your control the main aspect of your promotional strategy (i.e. Facebook, etc). But SoundCloud has been such a useful one, especially as an embeddable platform for our own sites. I’ll be in some trouble just like the rest of you if SC goes under, or if they limit streams for non-paying listeners or start to include audio ads in my content … there will be a heavy load of site embeds to replace. It might be a good idea for us all to start thinking about and preparing for this now.

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