Music streaming platforms have become very common at this point in time. Most people are listening to music through music streaming platforms these days. This is because of the comfort and convenience that is offered by them. It is very easy to access music today compared to a few decades ago. Before the internet was a thing the only way you could hear music was through CD, cassette tapes, and radio. But once the internet started to reach more and more people everything changed for the music industry. When the file-sharing platform Napster burst into the picture everyone in the music industry was devastated. This is because it was killing the concept of selling records. All you had to do was enter the name of the artist and you would find all the tracks made by them.
Once they realized that there was no escaping from it they started thinking about the ways in which they could leverage it. They came up with the conclusion that rather than fighting let’s use it to make money. That’s when iTunes started charging a small fee to download songs. After that, a few platforms emerged that allowed people to stream music. The article you are about to read is about one such company that is SoundCloud. This is s name that you will be familiar with if you have ever searched for music online. This is one site that would appear as one of the top search results when searching for music. Soundcloud has been around for a long time but many people still don’t know about it much. This article is completely about that. It will tell you how SoundCloud makes money and what its business model is. But before that let’s know a little bit more about the company itself.
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What is SoundCloud?
SoundCloud as already mentioned earlier is a music streaming service. But this was not the original idea when it was founded. This company was founded in 2007 in Berlin. It was founded by two Swedish men Alexander Ljung and Eric Wahlfross who was a sound designer and an electronic musician respectively. Their friendship began when they were in college. Alexander had trouble syncing his school calendar with his MacBook which was also the problem shared by Eric. The original intent of the founders was to create a platform that allows musicians to collaborate with each other. However, in the end, it became a platform for music distribution. The company was an alternative to MySpace for sharing music. The operations took after it received a Series A funding of €2.5 million from Doughty Hanson technology ventures in 2009.
As a music platform, the company was reaching new heights as it already has 160,000 artists sign up with it in the first year. In 2012 the company released a new APN which made the platform more user-friendly for the people. It allowed people to create personal collections and concurrent listening. This was the time when SoundCloud was really picking up. It had 180 million users per month in 2012 and 10 hours of content was being uploaded every single day. Throughout the years there were many reports that the company was going to be acquired by other companies. The most notable ones among them were Twitter and Spotify. But on both occasions, the idea was abandoned. SoundCloud had to close two of its offices in London and San Francisco when it incurred losses in 2017. By 2019 the platform had more than 175 million users per month.
The business model of SoundCloud
There are few things that make SoundCloud different from other music streaming platforms. SoundCloud is not only a music streaming platform but it is also a music sharing platform where artists can share their music. There are some things that SoundCloud follows as a part of its business model which makes it unique. Let’s look at the important components of the business model of SoundCloud.
Offering a platform where artists can create and share music
SoundCloud is probably the first of its kind when it comes to providing a platform for artists to share their music and collaborate with other artists. Before this artists and people used MySpace but when SoundCloud burst into the picture it started to fade away. SoundCloud was not like any other music streaming platform. It acted as a social media platform for artists.
Music distribution tool
As mentioned earlier before the rise of the internet there were only a few ways in which people could access it. But iTunes had changed the way people listened to music. SoundCloud knew they had to distribute music if they wanted more and more albums in their library. So instead of becoming a platform for music artists to collaborate it became a music distribution platform. It signed deals with music labels and artists to sell music. SoundCloud made music accessible to more people.
Key partners
SoundCloud is partnering with many top brands and companies. It creates the music for these companies that they use to promote their brand and products. It is associated with companies like Netflix, Sony Pictures, Amazon, Pepsi, HBO, Jaguar, Microsoft, Jeep, Red Bull, Warner Bros, Starbucks, Taco Bell, and other companies.
How does SoundCloud make money?
SoundCloud has more than one way of making money. Let’s go through them one by one.
Subscription fees
This should come as no surprise to you as it is a music streaming service. Even though the users can use the free version it offers subscription plans that have more perks. It has three subscription options, they are SoundCloud Go, SoundCloud Go+, and SoundCloud Pro unlimited. Each one offers its own different features. While Go and Go+ are for listeners Pro unlimited plan is for music creators. Go and Go+ allows users to listen to ad-free, unlimited music, online music as well as other things. Pro unlimited allows the artist to upload an unlimited number of songs, scheduled releases, receive insights, and more.
Advertisements
This is the most popular and common way in which websites make money in the current age. Like any other online platform, SoundCloud makes money by displaying advertisements on their website. These ads are not displayed for people who have a subscription plan. Instead, these are the ads that the free version users have to see. They have to see these ads if they want to stream music.
Events
Apart from its online services SoundCloud also makes some money by hosting events. It doesn’t necessarily have to be a music event but it can also be a forum. SoundCloud makes money through this event by selling tickets.
Conclusion
This is the business model of SoundCloud. It is responsible for offering a platform for artists to share music and users to stream music. You can know more about other interesting business models on Zeen. Click here to know about the business model of Intel.
