{"id":5408,"date":"2015-07-27T05:06:49","date_gmt":"2015-07-27T05:06:49","guid":{"rendered":"http:\/\/skylight.gr\/administrator_wordpress\/index.php\/2015\/07\/27\/soundcloud-is-facing-financial-issues\/"},"modified":"2015-07-27T05:06:49","modified_gmt":"2015-07-27T05:06:49","slug":"soundcloud-is-facing-financial-issues","status":"publish","type":"post","link":"https:\/\/skylight.gr\/index.php\/2015\/07\/27\/soundcloud-is-facing-financial-issues\/","title":{"rendered":"Soundcloud is facing financial issues"},"content":{"rendered":"


Streaming mega-giant SoundCloud is now close to exhausting its available financing, according to three individuals close to the organization.\u00a0 SoundCloud, whose valuation recently soared past $700 million on an estimated $123.3 million in cumulative funding, is not only \u201cdangerously low on cash,\u201d but also faces significant obstacles finalizing its next round, according to details expressed in confidence to Digital Music News.
A separate source explained that SoundCloud is at risk of exhausting readily-available funds and will likely require an \u2019emergency bridge,\u2019 either from existing investors like Union Square Ventures, or alternatively, a bank, by the end of this year.\u00a0 On timetable, sources couldn\u2019t specify the exact \u2018runway,\u2019 or exact time remaining under static financial conditions and no additional funding.\u00a0 But two sources agreed that the situation could become quite serious if additional funds aren\u2019t secured by the end of this year, ie, within 4-5 months.<\/p>\n

The news closely follows rumors of intensifying licensing demands from the major labels, and imminent legal action.\u00a0 Last year, Soundcloud closed an important round with Warner Music Group, though that is now being viewed as a \u2018one-off\u2019 brokered by crony ex-WMG-turned-SoundCloud exec Stephen Bryant.\u00a0 The WMG deal involved a percentage stake in SoundCloud of up to 5 percent, according to sources, as well as a publishing pact with Warner\/Chappell Music Publishing and consideration for all-important \u2018derivative works,\u2019 which refer to samples and snippets of copyrighted works that are frequently threaded into DJ mixes.<\/p>\n

Of course, DJs and EDM are a critically-important component of SoundCloud, which makes derivatives an equally important consideration.\u00a0 Currently, startups like Dubset Media Holdings are pushing to broker a derivative works exchange, a multi-billion marketplace that often involves dozens, if not hundreds of samples within one DJ mix.\u00a0 Right now, derivative licensing solutions are somewhat crude, making it difficult for mega-streamers like Spotify to license mixes and DJ sets.\u00a0 Currently, Spotify has 30 million tracks, all of them fully licensed, while SoundCloud boasts more than 100 million, with few properly licensed.<\/p>\n

All of which makes the majors less than enthusiastic about their non-existent cut.\u00a0 The cash component on the Warner deal was unclear, though neither the percentage or cash considerations afforded to WMG seem sufficient for the other majors.\u00a0 Since WMG inked, remaining majors Universal Music Group and Sony Music Entertainment have yet to finalize deals, and are reportedly demanding far larger upfront payments and percentage shares in the mega-valued SoundCloud.<\/p>\n

More importantly, UMG and Sony are also threatening to sue SoundCloud if talks don\u2019t progress at a faster pace, according to earlier sources.\u00a0 And that, more than anything, is choking SoundCloud\u2019s access to cash.\u00a0 \u201cInvestors want to see what happens [with the majors] before they put more money into it,\u201d one source told Digital Music News.<\/p>\n

So, how much to feed this beast?\u00a0 A separate source pointed to a recent, $32 $35 million-plus advance payment demand by Sony Music in separate negotiations with TIDAL.\u00a0 That demand was subsequently eased, though it demonstrates the ball park that SoundCloud is probably dealing with.<\/p>\n

Meanwhile, SoundCloud is plowing forward with a subscription-based service, though details remain incredibly vague.\u00a0 Just this morning. SoundCloud co-founder and Chief Technology Officer Eric Wahlforss pointed the Wall Street Journal to top-level subscription plans, but left out components like price, launch timetable, and premium products.\u00a0 Earlier, fellow SoundCloud co-founder Alex Ljung noted that free access will always be a cornerstone of the SoundCloud service.\u00a0 \u201cThere are 3 billion people online, you\u2019re never going to all get those into subscription, it\u2019s just not going happen,\u201d Ljung flatly told a group of industry executives at Midem.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Source: Digital Music News
Image: Creative Common License<\/p>\n","protected":false},"excerpt":{"rendered":"

Streaming mega-giant SoundCloud is now close to exhausting its available financing, according to three individuals…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[23],"tags":[],"class_list":["post-5408","post","type-post","status-publish","format-standard","hentry","category-music-news"],"_links":{"self":[{"href":"https:\/\/skylight.gr\/index.php\/wp-json\/wp\/v2\/posts\/5408","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/skylight.gr\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/skylight.gr\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/skylight.gr\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/skylight.gr\/index.php\/wp-json\/wp\/v2\/comments?post=5408"}],"version-history":[{"count":0,"href":"https:\/\/skylight.gr\/index.php\/wp-json\/wp\/v2\/posts\/5408\/revisions"}],"wp:attachment":[{"href":"https:\/\/skylight.gr\/index.php\/wp-json\/wp\/v2\/media?parent=5408"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/skylight.gr\/index.php\/wp-json\/wp\/v2\/categories?post=5408"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/skylight.gr\/index.php\/wp-json\/wp\/v2\/tags?post=5408"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}