BREAKING NEWS

SoundCloud Launches Premium Service

MANHATTAN BEACH, Calif. — Another company wants you to spend $9.99 monthly to listen to unlimited music.

This time around, it’s SoundCloud, the largest online audio service, looking to convert free users to paid subscribers with a mammoth base of 175 million monthly visitors. That’s more than Spotify, Apple Music and Pandora combined.

This time around, it’s SoundCloud, the largest online audio service, looking to convert free users to paid subscribers with a mammoth base of 175 million monthly visitors. That’s more than Spotify, Apple Music and Pandora combined.

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Screengrabs from SoundCloud’s new Go premium subscription service

SoundCloud hopes to entice its audience of music fans looking for remixes, demos and new music from unsigned bands and popular artists to spend money on getting unlimited music streaming as well.

Following long negotiations with the major record labels and independents, the SoundCloud Go service opens for business Tuesday with the addition of licensed music from the major labels, an ad-free experience, and the ability to download songs (and podcasts) and play them offline. (USA TODAY’s podcasts are hosted on SoundCloud.)

“Our audience is so big,” says Berlin-based SoundCloud co-founder Eric Wahlforss, on a recent California visit. “We had to try this.”

The new offering differs from Spotify, Apple and the rest in that its singular focus is on listening to, discovering and sharing single tracks. There’s no way, for instance, to click a button and listen to the entirety of the new Gwen Stefani “That’s What the Truth Feels Like,” album, for instance.

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Gwen Stefani’s music is available on SoundCloud Go

Spotify is the leader in the premium music space, with 30 million paying subscribers. Apple Music, which launched in June, 2015, has 11 million subscribers. Pandora is the most popular free online radio service, (and looking to expand into premium subscriptions) with over 80 million monthly listeners. Tidal, owned by a variety of recording artists, including rapper Jay-Z, says it has over 1 million paying subscribers.

Google Music and YouTube Red, two other music subscription services, haven’t revealed subscriber totals, nor has Amazon Prime Music.

But SoundCloud is in a unique position, as the most popular source for uploading music and podcasts directly online in MP3 form. Facebook, Twitter and YouTube for instance, don’t accept MP3 uploads. SoundCloud does.

“Everyone listens to SoundCloud,” says Peter Csathy, CEO of Manatt Digital Media, which invests in tech startups. “It’s where people post their music, where kids go to listen. It’s become the hub for musicians and fans.”

Beyond the emerging and unknown, many top artists like Miley Cyrus, Kanye West and Beyonce also post their new songs directly to SoundCloud, as a way to build excitement for a tour, or get feedback on a new tune.

SoundCloud is “where new music is born, where people go to check things out,” says Bob Lefsetz, who writes the popular Lefsetz Letter blog,. “We want to be where our friends are.”

Wahlforss says he thinks folks will sign up for Go as a way to get access to more music, and a direct connection with musical artists.

But getting even 1% of the user base to start paying the premium subscription is going to be a challenge, says Csathy. “Young people don’t have credit cards.”

Lefsetz says Spotify will continue as the No. 1 streaming service, “because it had first mover advantage,” while SoundCloud Go will find it slow because “it’s a latecomer. It’s coming to a relatively mature sphere, where people are fighting for market share.”

Wahlforss wouldn’t predict how many would sign up, but said he hoped to do “way better” than 1-2% of SoundCloud’s user base over the long term.

A 2% sign-up at $10 monthly would produce over $400 million yearly.

That’s the good news. SoundCloud’s financials recently produced a spate of negative headlines, when a report made to the British Companies House, the United Kingdom’s registrar of companies, was made public. It revealed that SoundCloud was losing more than it was bringing in, reporting a 2014 loss of $44 million to sales of $17.3 million.

Wahlforss says “those numbers are old,” and that the company is doing much better now, but wouldn’t get specific.

SoundCloud has since raised $77 million in equity, and Wahlforss predicts “SoundCloud will be around for quite some time.”

The company has raised a total of $158 million in funding, from both new investors includingformer NewsCorp president Peter Chernin’s The Chernin Group, and Institutional Venture Partners, along with Kleiner Perkins Caufield and Byers and Union Square Partners.

The company makes money by selling premium “pro” services that allow creators to post more media monthly, starting at $50 monthly. Pro accounts get the new Go service for six months at $4.99. There is a free 30-day trial to test out the service.

Source Cowan: USA Today

 

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