Down Stream: Where did it all go wrong for Soundcloud?

Over the last few weeks, the future of Soundcloud has been more perilous than ever. After years of struggling financial problems, lack of investor confidence and user dismay, the Berlin-based company recently announced that it was to close both its London and San Francisco offices, laying off 40% of its staff in the process. While the company itself has claimed that it isn't looking to shut down, they have announced that they only have enough funding to last until September, but where it goes from there, no one seems to know. This of course has led to large numbers of people predicting that Soundcloud will in fact be closed by the end of the year as many users of the site begin to transfer there material to other platforms. But given that Soundcloud is the most well-used online streaming service in the world, how on earth has it come to this?

The troubles with Soundcloud have been long documented. Despite being the market leader in online music streaming, it has yet to turn a profit, mainly down to a lack of understanding its audience. The same thing happened to HMV when it fell behind in the growing MP3 market, leaving it out of the loop when it came to the profitability of itself and the artists it was representing. Soundcloud has been trying to promote a more financially stable platform, adding both a premium service and adverts between songs. But given that less than 10% of those using Soundcloud actually have a premium account and that listeners generally only visit the site to listen to one track at a time, these two ventures have fallen flat for the company.

But as we have seen from other streaming services like BandCamp, there are ways to encourage more profit from the site's use. Many artists over the last few years have chosen to reject Soundcloud in favour of BandCamp as the latter provides far more avenues for the artist to make money. Not only does the site provide more secure streaming for its users, but fans can also purchase their new material through the site, earning BandCamp a tidy commission. They recently extended this premise by allowing artists to sell merch including physical releases through their platform, generating exclusive material for artists to share with their fanbase. Something that Soundcloud has so far failed to embark on.

But what seems to have frustrated people the most about the service is its heavy-handed approach to copyright infringement. While it is always good to have a strong and hardline stance at the use of other artist's material, the platform's automated searching tool has far too often come a cropper, usually deleting and sometimes banning users for uploading their own material. This means that the major artists and original copyright holders of songs can sometimes not upload their own material, which seems to project more about what Soundcloud thinks it is than what it actually is. The copyright fiasco seems to show that Soundcloud pictures itself as a DIY self-starter platform for emerging artists and therefore needs to protect itself from those artists that sample without permission. But the reality is that most artists, regardless of genre or country, are using Soundcloud and being able to differentiate between a major label artist and bedroom producer seems like a hurdle they are yet to overcome.

Yet despite the turmoil, there is still hope for the service but one that seems to have some serious questionable actions to it. Since the announcement of their staff departures, many artists including Chance The Rapper have begun to band together in order to buy the company out and thus save it from its inevitable decline. But the idea of having artists controlling streaming services is already proving troublesome for the Jay-Z operated Tidal, a service that is also yet to turn a profit and one that seems to give preferential treatment to the artists who have a stake in the company over those that don't. Which if this were to happen to Soundcloud, could see the company become the largest promotional tool primarily for the handful of new musical owners.

In the end, Soundcloud is probably going under and most likely sooner than we would all care to admit. It would definitely be a shame to see it go, but the reality is that it grew too big without anyone stepping in to monetise when it could. The days in which Soundcloud could have turned a profit are long gone, and with all this bad press and reputation heading into the gutter, the chances they can turn it around now are next to none.