how-does-soundcloud-make-money

How Does SoundCloud Make Money? The SoundCloud Business Model In A Nutshell

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.

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:

  1. SoundCloud Go ($4.99/month) – offering ad-free listening plus the ability to save unlimited tracks for listening offline.
  2. 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.

Read Also: How Does Spotify Make Money.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"