Home Blog Music Biz: SoundCloud Earnings “Burning Cash While Building For Future”

Music Biz: SoundCloud Earnings “Burning Cash While Building For Future”

333
0
soundcloud

soundcloud-ipad-biz-2016Music Biz: In 2014, SoundCloud spent $63.8 million to generate $19.7 million. It has since raised another $77 million in funding.

SoundCloud’s latest earnings report shows a familiar pattern in music streaming — the company’s expenses and losses far outpaced its revenue growth in 2014.

Revenue grew 53.9 percent to €17.4 million (US $19.7 million) but its loss before income taxes, depreciation and amortization nearly doubled to €36.9 million (US $41.8 million). The deficit came from a large increase in administrative expenses — the staff to develop and market the service — up 67.8 percent to €47.8 million (US $54.1 million). In all, including cost of sales, SoundCloud spent €56.4 million (US $63.8 million) to generate €17.4 million.

Fast growth meant SoundCloud was burning cash in 2014. Its operating activities — the normal course of business — had a net outflow of €32.3 million. Cash on hand fell to €14.9 million from €47.2 million E. Financing activities had a net inflow of €2.1 million in 2014 compared to a net inflow of €45.8 million in 2013.

In order to keep its growth engine fueled, SoundCloud raised $77 million in funding last year, and it may need even more. The earnings release says the company’s business plan shows that “further capital investment will be required in the next 12 months” in order for its operations to become cash flow positive. The company expects losses to continue for another three years as it signs more licensing deals and invests further in its platform.

Its investors — including Union Square Ventures and Kleiner, Perkins, Caufield & Byers — are clearly betting SoundCloud can turn its popularity and ubiquity into sizable subscription and advertising revenue. It hasn’t been successful so far. SoundCloud was widely reported to have 175 million users globally around the end of 2014. But its average revenue per user, or ARPU, was just 11.2 cents.

Two benchmarks indicate a range of revenue that could be expected from SoundCloud. Spotify had an ARPU of roughly $27 in 2014. At that ARPU, SoundCloud’s user base would have generated revenue of $4.7 billion. But Spotify is different than SoundCloud. It gets about 91 percent of its revenue from subscriptions. SoundCloud may not be able to convert a substantial portion of its listeners into paying customers.

A better comparable is Pandora, primarily an advertising-based service that got 21 percent of revenue from advertising. It had an ARPU of roughly $11 that year. At that rate, SoundCloud’s user base of 175 million would have generated $1.9 billion.

A revenue range of $1.9 billion to $4.7 billion seems lofty for a company that took in $19.7 million. But that’s what should be expected from a company that is monetizing a massive user base built on free music.
SoundCloud Earnings: Burning Cash While Building For Future
SoundCloud Earnings: Burning Cash While Building For Future
billboard
Source: billboard

Previous articleNew Music- French Montana Drops Sanctuary Pt. 2
Next articleNew Music: Dej Loaf, SZA, Tinashe and More Cover The Fugees’ Killing Me Softly
Welcome to MyMusicMylife.com FOR IMMEDIATE RELEASE Music Marketing Specialists MyMusicMylife.com Procuring Exposure for Emerging Artists on Shoestring Budgets. Emerging artists looking to get exposure for their talent but are working with a small budget now have an ally in music marketing specialists, MyMusicMyLife.com. For the last 15 years, MyMusicMyLife.com and Urban Threshold, INC. has been helping new artists promote their music, videos, and mixtapes to attract national exposure for their work. The company offers a wide range of services including: securing radio airplay on internet, satellite and FM radio. They help artists connect with the right audience through features on popular music blogs and magazines such as Hip Hop Weekly and XXL Magazine. MyMusicMyLife.com has been instrumental in the success of many artists including Hip Hop artist Nakaya, whose track ‘Ayo’ made it to number 5 on the Digital Radio Charts Top 80 ( source 9/5/2015 charts on www.digitalradiotracker.com ). The company also helps unsigned and indie artists get booked for paid shows. Managing director of My Music My Life, Rob Wright said: There are several talented artists today who want to showcase their talent to the world but are limited by their small marketing budget. We are here to bridge that gap and have been doing this successfully more than a decade.” There is nothing quite like getting recognized for one’s talent and MyMusicMyLife.com ensures artists get highlighted for their great work through their 11-year running music award show, Underground Music Awards. To help artists garner even more exposure, the company regularly hosts free music contests for best song and best music videos on their site. In addition, they interview artists and post it to their website. For further information, please visit: https://www.mymusicmylife.com. ### Media Contact: Rob Wright Email: info@MyMusicMyLife.com