From Rags to Riches: Despite starting at humble beginnings and dodging bankruptcy, SoundCloud is now expected to be sold for over $1 billion
Founded as a project to allow musicians to better collaborate on recordings over 15 years ago, this streaming and distribution juggernaut is now in line to be sold for over $1 billion this year. Below, we outline the history of SoundCloud and its rise to prominence.
In 2008 Swedish sound engineer Alexander Ljung and electronic musician Eric Wahlforss launched the SoundCloud website, to allow musicians to collaborate easier by sharing and discussing recordings.
It then turned into a platform for music publishing and distribution, challenging Myspace as the place for musicians to soft-release their music. Only one year on from its launch, it received €2.5 million in Series A funding from Doughty Hanson Technology Ventures. The fast growing platform went on to reach 1 million users as early as May 2010, and then reported $10 million Series B investment in January 2011. By May 2012, SoundCloud had 15 million users, and site usage was increasing by 1.5 million each month!
Since then, the platform has cemented itself as, not only a major streaming player (particularly for grassroots artists), but also as the place for independent artists to soft-release their music ahead of mainstream distribution – giving many artists a much needed space to easily share music with the press, other artists/collaborators, and industry professionals before official release day and mainstream distribution. This has made SoundCloud somewhat of a grassroots indie artist safe space for sharing, experimentation, and collaboration.
In August 2014, they announced an array of new monetisation features for artists to take advantage of; and by December 2014 SoundCloud valuation surpassed $1 billion. It was the following year that the major labels started to take notice, come onboard as partners, and even gained stakes in the company (WMG in particular). Despite huge finances and mainstream attention, SoundCloud is still a major hub for up and coming, grassroots level, and independent artists.
But even with all these new monetisation features, huge investments, and growth; surprisingly SoundCloud still actually pays the lowest rates per stream than any other platform, paying out only $13 per 10,000 streams on SoundCloud Go.
Main investors Raine Group and Temasek Holdings, are now preparing to sell the company for at least $1 billion plus, and have now begun interviewing investment banks for a prospective auction of the company. This is made even more surprising, given that when these owners took over in 2017, the company was actually on the brink of bankruptcy. Eliah Seton taking over as CEO in 2023 has been largely attributed to its turnaround – specifically laying off 10% of staff with an eye for annual profitability for the first time may have been a key factor. The process of selling the company is unlikely to get underway for some months, but it is certainly planned for this year.
