Soundcloud Business Model: How Does Soundcloud Make Money?


SoundCloud is one of the most popular distinct outliers in the online streaming music business. What makes the platform unique in the music streaming industry is how this platform allows anyone to stream and upload music without any annoying ads or monthly charges. However, when it comes to the Soundcloud business model: How does Soundcloud make money? Then this music streaming platform has numerous options to choose from.

For anybody who wants to leverage Hip Hop and music of their time for free, then the SoundCloud platform is proved to be the best solution for them. In the same way, most of the music lovers are also making use of music streaming platforms like Netflix, Spotify, and many others on regular bases. But compared to other streaming platforms, most of the people who want to enjoy their favorite music go for SoundCloud.

Global Traffic to Music Streaming sites

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How SoundCloud Works to Generate Revenue?

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SoundCloud has around 76 million registered users who were measured in March 2019, while it has around 175 million unique monthly listeners. SoundCloud in 2016 announced that it has more than 200 millionth track, which has successfully established on the platform.

In one of the reports, SoundCloud also stated that it has more than 125 million tracks available across on its subscription tiers, this platform has measured a huge jump in the last few years and proved to be a more effective and benefiting platform for customers who aim to leverage the use of this platform on their preferred device.

SoundCloud is an online audio and music sharing distribution platform. This platform allows anyone to explore and listen to music as per their taste, while artists can promote, upload, and share their work with others as per their choice. Music lovers are allowed to leverage the music of their choice through the Soundcloud app and website on any of the platforms they are using.

What makes SoundCloud unique from other streaming platforms is its focus on communication. Users are allowed to place comments on track to show their appreciation or other feelings they have for the track. Furthermore, users are also allowed to discover new music through advanced functions offered to them.

On the other hand, SoundCloud also offers an amazing set of tools to promote and assess their music. While this platform has high global traffic than other music streaming sites such as Spotify and Pandora as more users preferred to use this platform to leverage music of their choice on their preferred platform.

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SoundCloud Business Model: Explore How SoundCloud Makes Money?

SoundCloud mainly focuses on free media content, music lovers can leverage the different types of music on the streaming platform. With around 200 million subscribers, SoundCloud’s listening base is quite higher than any of its competitors. It is estimated that SoundCloud is facing a huge loss from 2013 to 2015, they reportedly face a loss of $85 million. Due to this now, SoundCloud is making use of multiple strategies to enhance its revenue to a great extent.

Explore the SoundCloud business model to know how it makes revenue by satisfying all the demands of its users. Which new strategies have been implemented by the company to overcome various losses they faced.

Customer Segments

SoundCloud is operating successfully with a multi-sided business model. It has two interdependent customer segments that run parallelly to operate successfully and to satisfy customers’ demand. These 2 segments include music artists who want to deliver their music and consumers who want to leverage the same.

Value Proposition

SoundCloud mainly operates on six primary value propositions, this includes:

  1. Accessibility
  2. Pricing
  3. Customization
  4. Performance
  5. Risk Reduction
  6. Brand/Status.

The company creates accessibility by allowing passionate music artists to find audiences to share their work online. It helps them enhance their access by enabling them to embed their files on a social media platform like Twitter, Facebook, and many more.  SoundCloud efficiently supports WAV, AMR, AIFF, FLAC, OGG, AAC, ALAC, MP2, MP3, and WMA files.

SoundCloud offers a special pricing value proposition. Platform users are allowed to utilize a free option, they can even prefer to choose for a paid subscription for only $9.99 a month. This music streaming platform offers a 30-day free trial when any of the users consider opting for the premium version. Even artists are charged low fees of around $7 per month for an initial version while around $15 a month for the premium one.

The company builds customization by allowing its users to create playlists of their music. Artists are allowed to share their songs privately or publicly with social networks, blogs, and other websites. This helped the company to develop a strong presence and leverage tangible results for its business.

SoundCloud has partnered with various brands that help them to promote their offerings through music-related efforts. Some of the popular examples of positive outcomes for the company include:

Asics: It used SoundCloud’s solution to build the Go Run. Its playlist is used as part of the promotion for the Gel-Quantum 360 shoe, which ultimately resulted in a 30% increase in plays and also 4,500 profile followers.

AXE: This White Label made use of SoundCloud’s solution to build two different “Classical Remixes” as a part of their marketing effort, this finally resulted in more than a million branded track plays

The company has developed a powerful brand due to its success. SoundCloud has bills itself as the world’s leading social sound platform, attracting around 175 million monthly users worldwide. It successfully attracts around 82 million monthly users in the U.S. who are around 25% of the mobile population.

SoundCloud’s artists upload an average of 12 hours of audio per minute. Its artist membership is divided between up-and-coming artists or performers who will establish musicians. Moreover, it provides access to 135 million tracks and millions of listeners worldwide.

Revenue Streams

SoundCloud mainly has two revenue streams, that is:

  • Subscription Revenue Stream
  • Advertising Revenue Stream

Subscription Revenue Stream

In this, the main source of revenue is as follow:

  1. Artist Subscriptions
  2. Consumer Subscriptions
  • Artist Subscriptions

The company charges some amount from the artists to share and upload their music on a monthly and annual basis. It charges around $7 per month and around $63 per year for the basic edition (that is SoundCloud Pro), while it charges around $15 per month and $135 per year for the premium edition ( that is SoundCloud Pro Unlimited).

  • Consumer Subscriptions

The company allowed platform users to access the music provided by artists, it charged some amount for the platform users. The basic edition is completely free for the users, but they have to pay around $9.99 a month for the premium edition known as SoundCloud Go.

Advertising Revenues

Revenues are generated by charging some of the amounts from the third parties who want to advertise their offerings on SoundCloud’s platform. It offers various Advertisement options such as native, audio, display, and sponsorship opportunities.

Channels

The main channel for SoundCloud’s can be considered its website, through which they acquire more and more customers. The company prefers to promote its offering through advertising, its social media pages, and participation in conferences.

Customer Relationships

The primary SoundCloud is its self-service and automated nature. Customers leverage the music service through the platform with limited interaction with employees. The company tries to provide answers to frequently asked questions of platform users on its website. They even make use of personal assistance components such as phone, social media support, e-mail, and a community element to solve their customer’s doubts efficiently.

Bottom Line

SoundCloud heavily relied on its private investors as well as debt finance to support operations. However, the company is not shifting its attention to monetizing its service and also to capitalize on its large user base. They are generating revenue through monthly advertising and subscriptions by tapping a large customer base. SoundCloud is trying hard to rectify its string of underwhelming operating losses, which the company faced in previous years.

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Post by Alphanso Tech

Created in 2013, Alphanso Tech is a leading IT Consulting company with a presence in the USA, Canada, and India.We are a trusted and leading service provider to many top-tier companies in the area of Custom WordPress Development , Web Application Development , iOS App Development , Outsourcing Services, Online Marketing and many other related activities.

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