SoundCloud is an online streaming platform for music sharing and distribution founded in Sweden by Alexander Ljung and Eric Wahlforss. It was first launched in 2009; it was designed to be a place where musicians could share and discuss their music with others. The service is free and ad-supported, and there is also the premium version that can run without ads. In addition, the company makes money via advanced services for musicians and artists.
Business Model Element
Analysis
Implications
Examples
Value Proposition
SoundCloud’s value proposition centers around offering a platform that empowers both music creators and listeners. For music creators, SoundCloud provides a user-friendly platform to upload and share their music with a global audience. Creators can connect with their fans, receive feedback, and even monetize their content through various programs. For listeners, SoundCloud offers a diverse catalog of music, including tracks from emerging artists and genres not commonly found on mainstream platforms. Users can discover new music, create playlists, and engage with their favorite artists. SoundCloud’s free tier allows for broad accessibility, while its premium subscriptions offer additional features like offline listening and an ad-free experience. Overall, SoundCloud fosters a sense of community among creators and listeners, encouraging the discovery of new music.
Empowers music creators with a platform to upload, share, and monetize their music. Connects creators with a global audience and enables fan engagement. Offers listeners a diverse catalog of music, including emerging artists and niche genres. Provides tools for music discovery, playlist creation, and artist engagement. Offers free access for broad accessibility and premium subscriptions for added features. Fosters a sense of community and encourages the discovery of new music. Attracts both emerging and established artists and listeners seeking diverse music options.
– SoundCloud’s value proposition aligns with the need for a platform that supports emerging artists and diverse music genres. – Monetization options incentivize creators to use the platform and share their content. – Free access encourages a large user base, while premium subscriptions generate revenue. – Community building and artist engagement contribute to a vibrant ecosystem.
Customer Segments
SoundCloud serves two primary customer segments: music creators and music listeners. Music creators include independent musicians, bands, DJs, and producers looking to share their music with a global audience, connect with fans, and potentially monetize their content. Music listeners encompass individuals who enjoy discovering and listening to a wide range of music, including tracks from emerging artists and niche genres. SoundCloud caters to both free users and premium subscribers, offering various features and experiences to suit different preferences.
Serves two main customer segments: 1. Music Creators: Independent musicians, bands, DJs, and producers looking to share, connect, and potentially monetize their music. 2. Music Listeners: Individuals who enjoy discovering and listening to a diverse range of music, including tracks from emerging artists and niche genres. Offers free access to encourage a large user base and premium subscriptions for additional features. Caters to creators seeking a platform to share their music and listeners looking for a diverse music catalog.
– Addressing both music creators and listeners ensures a balanced ecosystem where creators can reach their audience, and listeners can discover new music. – Offering free access encourages a large user base, contributing to a vibrant music community. – Premium subscriptions provide an additional revenue stream and enhanced features for dedicated users.
Distribution Strategy
SoundCloud’s distribution strategy is primarily digital and mobile-focused. Users can access SoundCloud through its website and mobile app, available on iOS and Android devices. The platform provides an accessible and user-friendly interface for both creators and listeners. Creators can easily upload and manage their music, while listeners can explore and engage with tracks. SoundCloud’s integration with social media platforms and partnerships with music industry players further extend its reach and distribution channels, making it easier for users to discover and share music.
Relies on a digital and mobile-focused distribution strategy. Offers access through the website and mobile app (iOS and Android). Provides a user-friendly interface for creators to upload and manage their music. Offers listeners a seamless experience for exploring and engaging with tracks. Integrates with social media platforms and forms partnerships with music industry players to extend reach and distribution channels. Ensures accessibility and convenience for creators and listeners through digital platforms.
– Digital distribution simplifies access to SoundCloud’s platform, eliminating the need for physical distribution channels. – Mobile-focused accessibility allows users to engage with music on the go. – Integration with social media platforms promotes music discovery and sharing. – Partnerships expand SoundCloud’s reach and provide additional opportunities for engagement.
Revenue Streams
SoundCloud generates revenue through a combination of subscription services, advertising, and creator monetization programs. Its subscription services, including SoundCloud Go and SoundCloud Go+, offer premium features like offline listening, an ad-free experience, and access to an expanded music catalog. SoundCloud generates advertising revenue through audio and display ads played to free users. Additionally, SoundCloud offers monetization programs like SoundCloud Premier, allowing eligible creators to earn revenue from their tracks based on plays and advertisements.
Relies on revenue streams from: 1. Subscription services (e.g., SoundCloud Go and SoundCloud Go+) offering premium features. 2. Advertising revenue generated through audio and display ads for free users. 3. Creator monetization programs (e.g., SoundCloud Premier) allowing eligible creators to earn revenue from their tracks. Diversifies income sources through subscriptions, advertising, and creator monetization. Offers premium features to incentivize subscriptions and generate steady revenue. Supports creators in earning revenue from their content.
– Subscription services provide a recurring source of revenue and incentives for users to upgrade. – Advertising revenue supplements income while offering free access to a large user base. – Creator monetization programs encourage artists to use the platform and monetize their music.
Marketing Strategy
SoundCloud’s marketing strategy includes social media engagement, content marketing, partnerships, artist promotion, and user-generated content. The platform actively engages with its community and promotes user-generated content, including tracks, playlists, and comments, to enhance discoverability. SoundCloud collaborates with artists and music industry players to promote exclusive content and engage with their fan base. Content marketing efforts include blog posts, interviews, and articles that highlight emerging artists and music trends. Partnerships with music festivals and events create opportunities for promotion and engagement. Overall, SoundCloud’s marketing strategy revolves around nurturing a vibrant music community and promoting emerging artists.
Utilizes social media engagement, content marketing, partnerships, artist promotion, and user-generated content for marketing. Actively engages with the community and promotes user-generated content to enhance discoverability. Collaborates with artists and music industry players to promote exclusive content and engage with their fan base. Showcases emerging artists and music trends through blog posts, interviews, and articles. Forms partnerships with music festivals and events to create promotional opportunities. Fosters a vibrant music community and promotes emerging talent.
– Social media engagement amplifies the platform’s reach and user engagement. – User-generated content promotes discoverability and supports emerging artists. – Collaborations with artists and music industry players enhance the platform’s credibility. – Content marketing provides valuable insights into music trends and artist stories. – Partnerships with music festivals and events create promotional opportunities and community engagement.
Organization Structure
SoundCloud operates with specialized teams dedicated to product development, marketing, sales, partnerships, creator support, and business operations. Product development teams focus on enhancing the platform’s features for both creators and listeners. Marketing teams handle promotional efforts, community engagement, and content creation. Sales teams may work with advertisers and partners to drive revenue. Partnerships teams collaborate with artists, labels, and music industry players. Creator support teams assist music creators with inquiries and monetization programs. Business operations teams manage financial aspects, strategic planning, and overall company direction.
Employs specialized teams for product development, marketing, sales, partnerships, creator support, and business operations. Ensures continuous enhancement of the platform’s features and user experience. Focuses on promotional efforts, community engagement, and content creation to foster a vibrant music ecosystem. Collaborates with artists, labels, and music industry players through partnerships. Assists music creators with inquiries and monetization programs through dedicated support teams. Manages financial aspects and sets the strategic direction through business operations teams.
– Specialized teams contribute to the platform’s continuous improvement, user satisfaction, and operational efficiency. – Community engagement and support teams play a vital role in maintaining a positive user experience. – Collaborative efforts with artists and music industry players enhance the platform’s content and credibility.
Competitive Advantage
SoundCloud’s competitive advantage lies in its focus on emerging artists, user-generated content, diverse music catalog, and accessibility. The platform provides a space for emerging and independent artists to showcase their music, fostering a unique and diverse catalog. User-generated content, including playlists and comments, enhances discoverability and engagement. SoundCloud’s free tier ensures accessibility, attracting a wide range of listeners. Premium subscriptions offer additional features and support the platform’s sustainability. SoundCloud’s community-driven approach builds a sense of belonging among users and encourages the discovery of new music, setting it apart from more mainstream music streaming platforms.
Derives a competitive advantage from: – Focusing on emerging artists and offering a space for them to showcase their music. – Promoting user-generated content, enhancing discoverability and engagement. – Providing a diverse music catalog with tracks not commonly found on mainstream platforms. – Offering accessibility through a free tier to attract a wide range of listeners. – Premium subscriptions support the platform’s sustainability and offer added features. – Fostering a sense of belonging and community-driven music discovery.
– SoundCloud’s emphasis on emerging artists and diversity attracts users looking for unique music experiences. – User-generated content promotes engagement and supports emerging talent. – Free access encourages a large and vibrant user base, contributing to a thriving music community. – Premium subscriptions offer a premium experience while supporting the platform’s sustainability. – Community-driven music discovery builds loyalty and differentiates SoundCloud from mainstream competitors.
Table of Contents
Origin Story
SoundCloud is an online streaming platform for music sharing and distribution founded in Sweden by Alexander Ljung and Eric Wahlforss. It enables users to upload, promote, and share music.
When the SoundCloud website was first launched in 2009, it was designed to be a place where musicians could share and discuss their music with others. Importantly, Ljung and Wahlforss wanted this collaboration to be cloud-based. This was a revolutionary concept at the time since music was traditionally shared through cumbersome FTP servers. SoundCloud also allowed users to comment on specific parts of a track and gave musicians access to listener analytics data.
Eventually, the platform organically transitioned into a music distribution tool and began to take market share from dominant player Myspace. Addressing many of the pain points independent artists experience, SoundCloud acquired 130 million users in the first four years of operation.
In recent years, the company attracted criticism for shifting its focus toward high-profile artists and licensed music. As it searches for profitability, it has also engaged in mass restructurings. Nevertheless, SoundCloud claims it reaches over 175 million users each month.
SoundCloud revenue generation
SoundCloud has several revenue sources. Let’s take a look at each in detail.
Advertising
While users can access the site for free and listen to music, advertising will be played in between tracks.
SoundCloud is paid on a per-impression basis, or a cost-per-thousand (CPM) model to be more specific. For advertisers, there is a choice between a Simple (lower CPM) and Advanced (higher CPM) campaign. There is also a minimum ad spend per promotion of $25.
A portion of advertising revenue is then shared with the creator to keep the platform free for listeners.
SoundCloud Go
SoundCloud Go is a way for listeners to support artists without having to listen to ads.
Two premium subscriptions are offered, which also give listeners access to extra features:
SoundCloud Go ($4.99/month) – offering ad-free listening plus the ability to save unlimited tracks for listening offline.
SoundCloud Go+ ($9.99/month) – offering the above plus access to the full SoundCloud music catalog. Users can also mix tracks with DJ apps and get access to high-quality audio.
SoundCloud Pro Unlimited
For artists, there is also a paid subscription called SoundCloud Pro Unlimited. This allows them to:
Get paid for every play their tracks receive.
Get access to advanced listener insights.
Replace a track without losing its stats.
Enjoy unlimited upload time.
Here, SoundCloud charges musicians $12/month if billed annually and $16 if billed monthly.
Repost by SoundCloud
Repost by SoundCloud is a full-service marketing and distribution engine. Using this service, creators can repost their music to Spotify, Apple Music, and Instagram, among others. They can also pitch their work to popular playlists on these platforms.
The company charges $30 a year for this option. For SoundCloud Pro Unlimited users, the feature is free.
SoundCloud mastering
Musicians can also get access to a Dolby mastering service without leaving the SoundCloud platform. This produces release-ready tracks at a fraction of the cost of traditional mastering services.
Again, this service is free for SoundCloud Pro Unlimited Users for three masters per month. Additional masters can be purchased for $3.99 each.
Key takeaways:
SoundCloud is a Swedish online platform for the sharing, distribution, and collaboration of musicians and listeners. It was founded by Alexander Ljung and Eric Wahlforss who noted the cumbersome way music was shared via FTP servers.
SoundCloud collects advertising revenue from brands that play ads between tracks. A portion of this revenue is then shared with musicians to keep the site mostly free to use.
SoundCloud offers an ad-free premium subscription for listeners. For creators, the SoundCloud Pro Unlimited plan gives access to premium features including music distribution, professional mixing, and advanced listener insights.
Key Highlights
Founding and Purpose: SoundCloud is an online music streaming platform founded in Sweden by Alexander Ljung and Eric Wahlforss in 2009. It was created as a place for musicians to share, discuss, and distribute their music, with a focus on cloud-based collaboration.
Evolution and Market Share: SoundCloud transitioned from a platform for sharing and discussing music into a music distribution tool. It gained popularity by addressing pain points for independent artists and acquired 130 million users within its first four years.
Advertising: SoundCloud generates revenue through advertising. Advertisements are played between tracks for users who access the platform for free. Advertisers pay on a per-impression basis, and a portion of this revenue is shared with creators to support the free listening experience.
Premium Subscriptions – SoundCloud Go: SoundCloud offers premium subscription plans for listeners. SoundCloud Go ($4.99/month) provides ad-free listening and offline track saving. SoundCloud Go+ ($9.99/month) offers the same features along with access to the full music catalog and higher audio quality.
SoundCloud Pro Unlimited: Musicians can opt for SoundCloud Pro Unlimited, a paid subscription that offers various benefits, including getting paid for plays, access to advanced listener insights, unlimited upload time, and more. The subscription costs $12/month (annual billing) or $16/month (monthly billing).
Repost by SoundCloud: SoundCloud offers Repost by SoundCloud, a service that allows creators to distribute their music to platforms like Spotify, Apple Music, and Instagram. For $30 a year, creators can access this distribution engine and pitch their work to popular playlists.
SoundCloud Mastering: Musicians can utilize SoundCloud’s Dolby mastering service, which produces release-ready tracks at a fraction of traditional mastering costs. SoundCloud Pro Unlimited users get three free masters per month and can purchase additional masters for $3.99 each.
Revenue Diversification: SoundCloud’s revenue comes from a mix of advertising, premium subscriptions, artist services (SoundCloud Pro Unlimited, Repost, and mastering), and partnerships.
Market and Focus: SoundCloud has faced changes in its market focus, shifting toward licensed music and high-profile artists. Despite challenges, it claims a significant user base and continues to offer a platform for both creators and listeners.
A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.
A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.
A network effect is a phenomenon in which as more people or users join a platform, the more the value of the service offered by the platform improves for those joining afterward.
In an asymmetric businessmodel, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.
In an asymmetric businessmodel, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.
The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.
A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.
A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.
The term “crowdsourcing” was first coined by Wired Magazine editor Jeff Howe in a 2006 article titled Rise of Crowdsourcing. Though the practice has existed in some form or another for centuries, it rose to prominence when eCommerce, social media, and smartphone culture began to emerge. Crowdsourcing is the act of obtaining knowledge, goods, services, or opinions from a group of people. These people submit information via social media, smartphone apps, or dedicated crowdsourcing platforms.
While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.
Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.
The freemium – unless the whole organization is aligned around it – is a growth strategy rather than a businessmodel. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.
A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.
In a franchained business model (a short-term chain, long-term franchise) model, the company deliberately launched its operations by keeping tight ownership on the main assets, while those are established, thus choosing a chain model. Once operations are running and established, the company divests its ownership and opts instead for a franchising model.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
