SoundCloud’s investors just approved a life-saving $170 million emergency fund. Here are all the details.
SoundCloud just bought a few more months of life. But existing CEO Alex Ljung will no longer be running the show.
The emergency funding was given the green light this morning, according to details confirmed by company investors to Digital Music News. As reported on Thursday, incoming investors The Raine Group and Temesek led the emergency round, though they demanded preferential terms.
This is a risky bailout, so special demands are in order. Specifically, Raine and Temesek will receive first dibs on cash if SoundCloud gets sold, liquidates, or implodes. Those are all very real possibilities.
Leading up the vote, CEO Alex Ljung was urging former investors to vote ‘yes’. They did that — but they also voted ‘no’ on Ljung.
Accordingly, Ljung is being slotted into a ‘Chairman of the Board’ role. Sounds like a soft transition out of power, which raises a range of additional questions. At this stage, it’s unclear if Ljung will play an active role in the future direction of the company.
Either way, Ljung is playing along, while heralding the successful round and a bright future. But many point to Ljung as the culprit.
Indeed, as SoundCloud burned, Ljung has been blasted for wasting money and partying like a rock star. That included lavish offices, outrageous perks and scant strategies for monetization. Meanwhile, more focused companies like Spotify, YouTube, and Apple have been eating SoundCloud’s lunch.
Perhaps it’s time for some adults to assume control. And, determine a tangible, effective plan of action. Accordingly, replacing Ljung will be former Vimeo CEO Kerry Trainor. Mike Weissman will become COO.
CTO Eric Wahlforss is also moving.
Instead of CTO, Wahlforss will become ‘Chief Product Officer’. But that just creates another elephant in the room. After all, why weren’t Ljung and Wahlforss flat-out removed? Especially given the massive issues plaguing SoundCloud under their leadership?
Even worse, SoundCloud’s bailout package seems to be rewarding Ljung and Wahlforss with ongoing salaries.
Here’s a statement issued by SoundCloud to Digital Music News this morning.
“SoundCloud, the world’s largest music and audio platform, announced today it has reached an agreement on a significant investment from global merchant bank The Raine Group and Singapore-headquartered investment company Temasek. In connection with the investment, veteran digital media operators Kerry Trainor and Michael Weissman will join the SoundCloud team respectively as Chief Executive Officer and Chief Operating Officer.”
More as this develops.
YOU HATE SPOTIFY OR NOT, DECIDE YOU FUCKING USELESS TROLL
The Internet is a wonderful place, with freedom of speech for future generations to come!
Sir, you just made my morning. Thanks!
How does Soundcloud generate revenue? How is profit derived?
I, personally, started music websites 20 years ago. I hosted .rm files on my server, and there was a lot of streaming. Again, 20 years ago. And I wasn’t a million dollar company. Was nowhere near as big and “successful” as Soundcloud.
Point being, the economics of giving away free music without having money coming in doesn’t really lead to profit. 20 years ago, the hope was that the money and profit part would, over time, work itself out. Well, it’s 20 years later, and most of these companies haven’t yet figured out how to make profit when there is no money coming in from the people who are listening to the music.
Here’s the answer. Charge money for music that was typically free.
Isn’t Soundcloud basically dead on its feet? They can keep throwing money at it, another $170 M here, another $170 M there, and they can fire the guy in charge every so often. But the underlying problem is that there is no money coming in.
Back in the old days, 10-20 years ago, right when there were no websites, everyone was simply happy to get bigger. The website is big. We win. Hooray. But after 10 years or more (Soundcloud has been around a long time, right?) it’s not enough to be a big, popular website if there is no money.
“Sorry, there is no money in your account. Please add money to your account to play music.”
Soundcloud can charge a penny, a dime, whatever. And maybe that plan, to charge money, will fail miserably. But isn’t Soundcloud on its last legs already? Isn’t it expected to fail?
One thing interesting about Soundcloud, compared to Spotify, is that all the music on Soundcloud is there because it was put there by the people who made the music. Spotify tries to grab everything and put it on the site, including bands that don’t really want to be there. The relationship is between Soundcloud, and performers. And that can be relevant, there’s no one being forced onto Soundcloud, and there’s no hostility to Soundcloud.
TOTALLY CORRECT!
The actually get some money by milking hopeless and destitute musicians for
giving away their work to the society of FREELOADERS!
Shazam is another equally screwed-up antity milking investors for 17 years and providing info too freeloader how to STEAL BRILLIANT tune from YouTube.
Daniel Ek’s Spoofy and Apple Music streaming are in the same league unless they will start charging $49.99/ month for full service access to anything and everything!
At the end of the day, all of these “DSPs” a nothing more than music retailers,
selling music out of an online shop. If a bricks and mortar store functioned the same way as these guys. They’d be told by their creditors within 12 -15 months
to bang up the shop.
I’m sorry but, the digital romance is over. It’s just retail.
You are all welcome
Ain’t no school like the old school I’m the headmaster can’t be manipulated for specified search results for unaware users joke.
Wahlforss transitioned to CPO months ago, when Artem Fishman was brought in as CTO, long before the new round of financing.
Maybe if you stopped surpressing artist, blocking their tracks and making quality changes to the app people would be glad to pay for the website but instead you keep pushing horrible changes. For example the fact we can’t even use the search properly or view tracks when on an artist page since the last update. Just plain stupidity…