Bankruptcy-Flirting SoundCloud Slashes the Price of Premium

Bankruptcy-Flirting SoundCloud Slashes the Price of Premium
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Bankruptcy-Flirting SoundCloud Slashes the Price of Premium
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Stefan Kellner (CC by 2.0)

Will SoundCloud’s final ‘GO’ prove a hit with consumers, saving them from bankruptcy. Or will its premium price cut end up as a notable yet failed Hail Mary pass?

You work for a largely respected company. You’ve even received the title of “YouTube of Audio.”  Millions of relatively-unknown DJs have successfully used your service to share their tracks.  Artists like Chance the Rapper have praised you for boosting them up.  You sport 175 million monthly active users.

To capitalize on your popularity, you offer a $10/month premium service to convert your users into paying subscribers.  Yet, very few have subscribed.

Then, Spotify walks away from advanced acquisition talks.  The Swedish company believes you’ll most likely delay its IPO plans. Google also doesn’t want you.  Then, your COO and finance director jump ship.

Now, you must face the cold hard truth.  If your premium service doesn’t take off, by the end of the year, your company won’t have money.

Welcome to SoundCloud.

After mounting pressure to remain afloat, SoundCloud introduced a new, mid-tier premium service plan. In its press release, the streamer stated that it will introduce a $5/month Go starting today.  The premium $10/month service will still exist, this time rebranded as Go+.  The move was done to offer music lovers “more choice in how they experience [the service.]”

In a statement, Alison Moore, Chief Revenue Officer, said,

“SoundCloud Go answers the call from our users who want the ability to take the huge catalog of content found in SoundCloud’s free, ad-supported offering with them anytime, anywhere, without interruptions, at a very affordable price. And at the same time, we’re now giving users who haven’t made the jump into a music subscription plan, a robust, fully on-demand option at an accessible price.”

Alex Ljung, company co-founder and CEO, added,

“SoundCloud offers the largest, most diverse mix of established and emerging artists, all in one place. Now with three ways to experience SoundCloud: SoundCloud’s free, ad-supported offering, SoundCloud Go and SoundCloud Go+, users have even more freedom to choose the features and content they want, at the price that fits their budget.”

So, what exactly changes between it’s $10/month Go+ and $5/month Go?  Honestly, not much.  Go+ has unlimited listening to 150 million tracks as well as unlimited track previews. Go only has access to 120 million songs and 30 second track previews. Mid-tier paid subscribers will also have to listen to occasional messages asking them upgrade to Go+.

Yet, the large question looming over Soundcloud is: will its $5 mid-tier plan work?  Despite access to over 120 million songs, the mid-tier service won’t break any new ground.  Both Pandora and Amazon have offered lower-priced options.  Both companies have also completely unlocked features for low-paying subscribers.  Pandora also emerged as 2016’s most-streamed service. Amazon Prime Music also led streaming in the American household.

So what will SoundCloud offer to entice music lovers away from these two premium services (and Spotify, Apple Music, etc)?

Mid-tier SoundCloud paid subscribers will still have access to millions of songs.  Yet, they may find themselves locked out of popular songs by popular artists.  Should either of its Go plans fail to take off, Alex Ljung’s statement may (unfortunately) prove true.

“SoundCloud may run out of cash earlier than December 31, 2017… These matters give rise to a material uncertainty about the Group’s ability to continue as a going concern.”

8 Responses

  1. Outre Lights

    Has SC ever released Go subscriber numbers?

    Pretty much everyone I know uses some sort of streaming service, but none of them pays for Go.


    • Daniel Adrian Sanchez

      That’s exactly where the pressure lies on Ljung and staff. They have yet to convert SoundCloud’s large user numbers into paid ones.

  2. music stowaway

    Everyone wants a piece of the streaming subscription pie but they forget, the public are only prepared to fork out for one audio streamer, not two, three, four or whatever..

  3. Iain

    Most people I know gave up on SC when they dropped groups. Discoverability took a nose dive.

  4. Guy M

    Articles like this are almost fake news. DMN is generating a story from a set of facts which could be reported on more neutrally or positively. Speculating on the demise of a business that provides a service to rights holders to promo their content, is irresponsible and unhelpful. What are you aiming to acheive here? ‘Oh, we told you so. We told you Soundcloud was in trouble. We’re so f***ing clever.”

    As a record label, we use Soundcloud and if it does go under trying to maintain its business, it will leave us with a lot of work to find another way of presenting our catalogue and a lot of work to upload all that music and data again; work we do not want to have to do.

    I cannot say that DMN provides me with a lot of information that I don’t get elsewhere, and the flippant, gloating attitude that pervades reporting like this is taking me one step closer to asking to be removed from your mailing list.

    • THE DUDE

      I think you’re point your finger at the wrong person. It’s not DMN fault for SoundCloud’s paid subscriber base. This website is simply reporting the facts. Every indie label and musician understands the power of SoundCloud. It’s really comes down to the major labels breathing down their necks and the fact that a business can’t exist if it doesn’t make money.

    • Paul Resnikoff

      We’re not cheerleaders, sorry. Sure, we want companies in the space to do well. But take a look at SoundCloud’s financials. Seems like this is a financial disaster with zero discipline to create an actual business model. That’s just the hard analysis. If you want a puff piece on SoundCloud head over to Billboard.