How Does Soundcloud Make Money

Over the period, SoundCloud has established online music streaming community with millions of people across a globe being a part of it.

What are the ways in which SoundCloud earn money?

SoundCloud’s business model is different than others’ where they offer premium features to the users. They use advertising to promote products. SoundCloud Go and SoundCloud Pro are the other premium features of this platform. 

This platform, just like YouTube, has attracted numerous musicians around the world, allowing them to create new exciting content and letting them publish and stream it for free. So this makes us what to question what exactly is Soundcloud, and how does it generate revenue?

How Soundcloud Works

SoundCloud is a music sharing and publishing application allowing artists from across the globe to promote their work. In contrast, their work can be viewed by anyone around the world. For the consumer, they can have access to this platform either by using the mobile application or by visiting SoundCloud’s website.

SoundCloud pays a lot of attention in improving the communication between the users or between various artists and their viewers. One can comment on any published work to express their thoughts, admire the work or critique it. 

This, in turn, improves the quality of the app and the user experience at the same time. For the music producers and artists present on the platform, SoundCloud provides an extensive range of tools and products to help the artists in creating, publishing and promoting their works without any difficulty.

For those creators who have purchased the premium version of the app can access an extensive range of analytic tools which lets them look at the stats of their content, interact with various artists and communities and share tracks they prefer.

SOUNDCLOUD’S Business Model

Although SoundCloud provides a freemium service to all its users, one can access all the additional features the app has to offer by subscribing to one of the many plans the app has to offer. We now take a look at the methods the company implies to generate streams of cash flow.

1. ADVERTISING: 

SoundCloud has been collaborating with various other firms and streaming services. SoundCloud has advertisements between tracks to promote their partners. Their advertising partners include Amazon, Netflix, Starbucks, RedBull and many more.

Moreover, SoundCloud collaborates with various other firms to initiate and run numerous campaigns. These can be in the form of playlists of remixes to music contests.

2. SOUNDCLOUD GO: 

SoundCloud Go was introduced in 2016 as a monthly subscription-based plan for its users located in the United States. This program aims at utilizing the licensing agreements that SoundCloud has with brands like Sony Corporation, Merlin Network, Warner and Universal Music Studios. Android users can avail this service for the price of $9.99 per month while iOS users can receive this service for $12.99.

SoundCloud Go allows it’s subscribers to have access to an extensive library of songs, listen to music without any sort of advertisements in between and even download music for offline streaming.

3. SOUNDCLOUD PRO: 

To avail this service, the creators can buy their monthly subscription of $7 or the yearly subscription of $63. The SoundCloud Pro plan is mainly targeted towards the creators to allow them to maximize their reach and improve their profile. This multi-tiered plan lets the creator upload twice the amount of music than those with free accounts.

The creators also get access to an extensive range of analytic tools which allow them to view the stats, including play counts by country. Apart from this, the creators avail the feature of pinning their work on the top of their profile using the spotlight feature. 

4. SOUNDCLOUD PRO UNLIMITED:

 Creators can avail this service by getting the monthly subscription of $15 or the yearly subscription of $135. The creators having the SoundCloud Pro Unlimited subscription can have access to SoundCloud Go for a discounted price of $1.99. In this plan, the creators aren’t bounded by an upload limit.

The feature allowing users to upload unlimited music will enable them to be creative to the fullest. An additional range of stats is also made available to the user that includes the geographical location by the city of their listeners and information regarding the apps and web pages through which the user’s music was streamed or played.

5. On SoundCloud:

Invite Only: Similar to YouTube’s partner program, SoundCloud invite-only allows users to monetize their content through means of advertisements etc. On SoundCloud, the user can avail to four methods of advertising which include allotted time before songs, standard display advertisements, customized sponsorship and native advertisements for branch channels.

As stated above, SoundCloud partners with various brands to organize campaigns online sometimes in the form of music contests. SoundCloud receives an undisclosed amount from those advertisements as well. 

6. INDEMNITY: 

Although indemnity cannot be considered as a revenue stream in previous years, it has financially profited the company by a certain margin. The company’s negotiations with various music license holders have also included the indemnity for the previous contract violations.

An instance of this was witnessed in 2014 when SoundCloud went head to head with Warner Music Studios regarding a licensing agreement when it was made evident that there would be no coming back after the previous offences made.

Although such ways do not create a continuous stream of income for the company, license agreements do add to the company’s profit margins.

7. PRIVATE EQUITY AND DEBT FINANCING: 

SoundCloud has been seen organizing open investment periods frequently. During this period, brands can directly fund creators or channels. This is one of the primary sources through which SoundCloud generates its revenue.

In 2009, the Series A funding raised a massive 2.5 million Euros or approximately $2.9 million while the Series B managed to build an even more substantial sum of $10 million. The following two rounds were conducted in 2012 and 2014, which raised $50 million each, resulting in a cumulative amount of $100 million.

The Series E funding was held in June 2016 in which SoundCloud received a $70 million investment from Twitter Inc. In its recent funding, SoundCloud has managed to raise another $100 million.

   In 2015, SoundCloud had got around $35 million from Tennenbaum Capital Partners in the form of debt financing and around $70 million in the form of capital financing.

Here are some Important FAQs about Soundcloud Platform

What can I do with SoundCloud?

SoundCloud is the world’s largest open audio streaming and publishing platform. The community has over 20 million creators, with over 190 million unique tracks.

By joining the SoundCloud community, you can be a creator with the help of SoundCloud’s easy recording and publishing process along with extensive stats to track your work. You can be a listener and a curator with SoundCloud’s massive track library with music recommendations customized to match your taste.

How does SoundCloud work?

To be a part of the SoundCloud community, you can create an account at soundcloud.com using your email or Facebook. For listeners, you can subscribe to SoundCloud Go for an extensive song library and a better experience.

For creators, SoundCloud provides three different subscription plans, I.e. SoundCloud Pro, SoundCloud Pro Unlimited and SoundCloud’s Invite Only. The differences between the ideas and the subscription prices are mentioned above.

Does SoundCloud pay its creators?

To be eligible for payment, the creators have to be a part of SoundCloud’s Invite-only plan. The plan allows creators to monetize their content through various means such as advertisements and more. 

What is the following maximum limit?

SoundCloud limits the number of following to 2000 to provide better stability to the interface and avoid crowding on the stream or following page, therefore, letting the recommendation system work more effectively.

What is the status of my deleted SoundCloud account?

If you delete your track, the stats will still remain on your Stats Overview page. However, the track’s title information will be seen as ‘Deleted or disabled track’. If you delete your account, your stats will also be removed from SoundCloud as well.

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