By Sammi-Jo Wall
In the digital age there are a plethora of platforms that host music and other audio content. What platforms are popular, though, has shifted over time. In 2009, SoundCloud overtook MySpace as the dominant online music platform. Now, in 2020, SoundCloud has managed to stay relevant and make a hefty profit while doing so. How did they do it? How does SoundCloud gain the attention of listeners when there are other platforms available? And how are they making money from that attention? SoundCloud is, at its core, trying to get the attention of music listeners and profit off of that attention. The idea of the Attention Economy is that there is a limited amount of attention that an audience can give, and so that attention is valuable. However, SoundCloud is not the only platform that allows people to stream music. At present, SoundCloud finds its main competitor in Spotify, another popular music streaming service. So how does SoundCloud manage to get attention and make a profit despite being up against Spotify?
Before anything else can be explained, let’s take a look at the way SoundCloud gets attention. Both SoundCloud and Spotify, among other music streaming services, managed to overcome traditional radio and CD that had been popular at their conception because they present a sort of “celestial jukebox” for listeners. The idea of a “celestial jukebox” is best explained by the media scholar Siva Vaidhyanathan. Essentially a celestial jukebox is a conceptual platform or device that would allow people to access and consume all of the media that exists rather than having to individually purchase each piece of media. While audio streaming services like SoundCloud don’t allow for all forms of media, these services do allow people to choose exactly what music they’re listening to in a way that’s more convenient than buying individual tracks or albums. SoundCloud in particular also fills a unique niche by making it easy for independent artists to upload their music to the platform. Spotify only allows artists to upload if they have the backing of a record label or distributor, while SoundCloud allows artists to upload directly. As a result, SoundCloud has become the go-to source for independent music, especially in terms of rap and hip-hop. It’s also worth noting that SoundCloud doesn’t seem too worried about Spotify taking away attention since they created a service to help independent artists distribute their music to other streaming services, including Spotify. In the past Spotify had, planned to buy SoundCloud, so it seems that they are also aware of the fact that SoundCloud has something that they don’t have.
So SoundCloud has some attention. Now what? How does that make money? Before getting into the how it’s important to talk about the who. There are three key groups that are involved in SoundCloud’s economy: musical artists, advertisers, and listeners. The first two groups, musical artists and advertisers, flock to the platform specifically because it has the attention of listeners. Artists who are trying to publish their work want their music to be heard, and SoundCloud has the means to give them an audience. The way SoundCloud leverages this attention is by putting certain features for artists behind a paywall. Without paying for a “Pro Unlimited” subscription, only three hours of audio can be uploaded onto a profile. This subscription has other features like the ability to schedule music releases, see more insights, and monetize audio, and more. One of their other subscriptions, the “Repost” subscription, is the one which gives artists the ability to easily distribute their music to other streaming services.
Advertisers similarly want to use the platform because of the attention it has. SoundCloud has a specific page on their website that pitches the platform to advertisers. On this page they list statistics about how many people are listening to SoundCloud. This shows how they are quite literally selling attention; SoundCloud’s pitch for why advertisers should buy ad space is directly rooted in how many people are listening. After showing the statistics, the page mentions that they sell both visual and audio ad space. The audio ad space occurs before or after artist content and the visual ads function similarly.
Finally, there are the listeners. These users come to the platform to consume content and are the ones who give the attention that SoundCloud sells. Listeners using the platform for free allow SoundCloud to make money by simply using the website. As mentioned above, the attention of listeners is what leads advertisers and artists to pay SoundCloud. The other way that listeners generate income is through subscriptions. SoundCloud offers two different subscriptions for listeners: “Pro Unlimited” and “Repost.” If those seem familiar, it’s because they’re the same subscriptions offered to musicians. However, there are different features to draw in listeners than there are to draw in artists. The “Pro Unlimited” subscription is the one that most appeals to listeners. It offers features such as ad-free listening, higher quality audio, and the ability to save tracks for offline listening.
In 2017, when SoundCloud had only just introduced their subscription service, it was reported that they were struggling financially. That same year, the founders of SoundCloud were replaced by a new CEO. As of 2019, it seems that SoundCloud managed to turn things around. Their subscription revenue alone went up by 89% between 2017 and 2018. For the time being, SoundCloud’s unique angle of having independent artists has allowed the platform to keep relevancy in a world with various music streaming options. However, this does not necessarily mean that they will continue to be relevant in the future. With so many other options available and more being created every day, it becomes harder and harder to stay on top as a streaming platform. While SoundCloud does provide something completely different in terms of content, they could well be overtaken by another platform that gives freedom to independent artists, such as Bandcamp (which is becoming a threat to other streaming platforms). Can SoundCloud maintain their importance in the world of music streaming? Or are they doomed to be overcome by a competitor, just as they had overcome MySpace a decade ago?
