8tracks Is a Profitable Music Startup With Modest Funding. WTF?

  • Save

8tracks is on a roll. The company says they’ve remained profitable since 2012 with limited funding.

Back in April they secured direct licensing deals with CD Baby, INgrooves, Dim Mak, and DashGo. This direct licensing means that 8tracks in no longer dependent on SoundCloud for content.

8tracks has now announced new licensing deals with TuneCore, Naxos, Armada Records, and Black Hole Recordings. This adds about 2.5 million tracks to their library.

They’ve also taken $2.5 million in debt financing from Silicon Valley Bank. According to Billboard, $2 million is a line of credit against receivables and $500,000 is in venture debt. Prior to this, 8tracks had raised $3 million in seed venture funding.

8tracks will work on building their engineering and product teams.


Nina Ulloa covers breaking news, tech, and more: @nine_u

Photo by Pictures of Money on Flickr used with the Creative Commons License

10 Responses

  1. Packet Sniffer

    Few months ago I checked as I was listening via 8tracks website, and a lot of the tracks were sourced straight from SoundCloud’s backend. That means for those tracks 8tracks is shifting its hosting but most importantly royalty liability onto SoundCloud. SoundCloud terms officially allow such integration, but not for commercial purposes, the last I checked. Unsure whether they gave 8tracks special dispensation. The same could possibly be said about YouTube tracks, I haven’t checked.

    All that means is that up until now in prior years a huge number of plays were practically royalty free for them. And that’s folks how you keep it “profitable” – you just don’t owe too much compared to others. And Soundcloud hasn’t started playing gateway ads, so 8tracks continued to ride that out for a very long time building up its popularity. Well played, and all very hush hush, nobody ever mentioned that anywhere.

    • Shindu

      They must have some license from Soundcloud to use the tracks for commericial purposes. If not, then they would not have a legal right to the underlying music played on their service and, therefore, not be afforded the protections of the DMCA.

      I would assume the labels already vetted this since 8tracks has been around a number of years. If not, and the labels wake up, they owe it to their artists (ahem) to seek to recoup royalties from all those “profits.”

      • Wrong

        8tracks is not licensed and pays $0.00 royalties. They are getting away with this because they are so small and not worth the time. If they continue to stick their head up, it will get chopped off.

    • Dar

      Packet Sniffer, great analysis! You must be an expert, seriously. We got a couple biz model questions you could be a major help in answering, does the very good digital music news allow private text exchange? If not, I’d be very appreciative if you could email me at dardar11@monumentmail.com. Hey thanks.

  2. so

    8tracks got their music essentially for free for most of their existence.

  3. T. Silverman

    8tracks $0.00 payment in royalties for all these years is just as egregious as Groveshark. This company is NOT to be applauded for their business acumen. They are stealing real dollars from artists to make their so-called “profits.”

    Shame on them.

  4. Shindu Follow

    If not paying any royalities, 8tracks should get sued by indie rights holders. According to this article, they have money and do not pay royalties.

    So does anyone know if 8tracks has a legitimate license from Soundcloud to use the tracks for commericial purposes? Because, if not, I think Shindu’s point is correct, “they would not have a legal right to the underlying music played on their service and, therefore, not be afforded the protections of the DMCA.”

  5. Jason

    It took $200m before labels cared about suing SoundCloud. They don’t care about a few million at 8tracks (or mixcloud for that matter) and all the other services who make money but “not enough.”

    The sad part is while they deem a low 6 or 7-figure company not worthwhile to collect from, thousands of artists out there would happily take a check whether for $1000 or $1.