News - 03/03/2015

SoundCloud reveals paying out $1 million to partners over the past 6 months

SoundCloud reveals paying out $1 million to partners over the past 6 months

SoundCloud’s monetisation strategy “On SoundCloud”, when announced back in 2014, left many wondering as to whether advertising could constitute the bulk of its revenues in the future. 

Six months later, the company has attracted the advertising dollars of companies such as Grand Marnier, Jaguar, Mountain Dew and Microsoft, and has revealed paying out $1 million to just over 100 of its premium partners. 

The adverts have been limited to the US market for now and that shows that there is potential for SoundCloud to grow the advertising base significantly over the coming months internationally and by opening up the premium partners program.

Whilst the figure is significant, it is but a positive indicator of a strategy that may work but that will have to scale very quickly if the company wants to reduce its losses, which in 2013 were substantial at over $25 million. 

There are three other factors to take into account. 

The first is that “On SoundCloud” has focused on native advertising opportunities that partnered brands with specific artists. These have the potential of being highly successful campaigns but leave the question mark of how much work SoundCloud needs to put in to make them happen and how scalable a model that sees bespoke partnerships between artists and brands is.  

The second is that Universal Music has posted pretty dire results for 2014, which some believe has led to the management shake-up we’ve witnessed in the past couple of weeks and to the label moving its focus away from free ad-based options and towards subscription-based services. This new attitude could impact SoundCloud negatively unless the service has plans to introduce a paid streaming option in the near future. 

The third is that these advertising payments do not shed any light on what licensing deals may be in the works to ensure that creators are being paid for what is played on SoundCloud, is the company still working on large-scale deals with labels and PROs? 

These issues mean that the road ahead may still be pretty bumpy for SoundCloud, but the fact that advertisers are willing to spend money on the platform is an encouraging sign. 

 

(Andrea Leonelli)

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