SoundCloud is one of the world’s most popular music services.
It’s kind of like the YouTube for music, in that it lets anyone post any kind of audio: rough cuts from famous musicians, mixes from obscure DJs, independent tracks of every kind. Every month, 175 million people dip in for free listening to cool new music.
Unfortunately, nowhere in that description will you find any indication of how such a service makes money. And SoundCloud isn’t making enough. It may need to find a wealthy company to acquire it so it can survive.
In 2015, the company lost $52 million, and now things are looking grim. Last month, SoundCloud laid off 40% of its staff, and closed its offices in San Francisco and London. A devastating TechCrunch article on July 12 estimated it had enough cash to last for, at best, another 80 days.
The company has tried advertising; it’s tried a Spotify-style subscription service; three times, it’s reportedly been at the negotiation table to sell itself to a bigger company—Twitter (TWTR), Deezer, and Spotify. Each time, the deal fell apart when SoundCloud set a price that was too high for the buyer.
Meanwhile, a group called the Archive Team, whose specialty is backing up services that are shutting down, like GeoCities and Google Video, has promised to back up SoundCloud. (SoundCloud has ordered them to stop, insisting that its future is fine.)
At this moment, Bloomberg says that SoundCloud is in talks to be bought by two unnamed “private equity” firms; if that deal goes through, SoundCloud would soldier on that way, but lose its independence.
SoundCloud has that long history of killing deals, but it would do well to remember that YouTube itself would probably not be around if Google hadn’t bought it. Sometimes, the only way a struggling artist can survive—or struggling artists’ platform—is by teaming up with a wealthier partner. If it worked for patrons in Mozart’s era, it can work now.
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David Pogue, tech columnist for Yahoo Finance, welcomes nontoxic comments in the comments section below. On the web, he’s davidpogue.com. On Twitter, he’s @pogue. On email, he’s firstname.lastname@example.org. You can read all his articles here, or you can sign up to get his columns by email.