SoundCloud was thrown a $169.5 million lifeline on Friday, which is a pretty nice lifeline to have, especially when you’ve been drowning for several months now. As expected, it is boutique bank The Raine Group and Singapore’s state investment fund Temasek providing the new cash, which will buy the flagging streaming firm a bunch more time as it continues to try and shift its business into the more conventional streaming space.
The new cash injection will be accompanied by a change at the top of the SoundCloud business. Although co-founder Alexander Ljung will stay on as Chairman of the board, the top executive role will now be filled by Kerry Trainor, who previously headed up video sharing platform Vimeo. Another former Vimeo exec is also joining the top team, with Michael Weissman becoming Chief Operating Officer. Ljung’s fellow founder Eric Wahlforss remains involved as Chief Product Officer.
While the new investment has resulted in a change in management – and a considerable write down of the digital company’s valuation – it will bring to an end weeks of speculation that the end is nigh for all things SoundCloud. The digital firm has been far from financially secure for sometime now, though the doom and gloom predictions heightened after the company laid off 40% of its workforce and talked about only having enough money in the tin to get the business through to quarter four.
The Raine Group and Temasek clearly believe that there is still an opportunity to build a long-term profitable business on the back the SoundCloud platform, which still plays an important music discovery role among early adopters and decision makers within the music community. Though in recent years the company has shifted away from its original business of selling hosting services to content creators and instead moved into ad-funded and subscription streaming. Which puts SoundCloud into a very competitive market where even the major players, who have signed up millions of paying users, are currently loss-making.
But for now, for certain, Team SoundCloud can relax a little. Though there’ll presumably be pressure on Trainor and Weissman to come up with a realistic game plan in the relatively near future. It remains to be seen if they are as optimistic as Ljung about the firm’s chances of signing up music consumers, rather than creators, to premium accounts.
Meanwhile, here’s some optimistic quotes about the future. Says new boss Trainor: “As a huge fan of the SoundCloud platform since its founding, I deeply admire what Alex and Eric have built. There is only one SoundCloud and its importance to creators and music culture is undeniable. I’m very excited to join this talented team and build the next chapter of growth around SoundCloud’s mission to empower audio creators. I look forward to sharing more about our plan and path forward in the months ahead”.
Ljung hailed the start of the next chapter of his business by declaring: “Now in its tenth year, I’m proud to say SoundCloud stands as an indispensable part of global music culture. I look forward to fully dedicating my time to leading the board and helping drive SoundCloud’s long term strategic vision, and forging strategic partnerships and connections with industry partners and our one-of-a-kind creative community. With Kerry’s love of music and sharp business acumen, I know SoundCloud is positioned for continued success for many years to come.”
Speaking for the money men, Fred Davis at Raine added: “SoundCloud is a unique and essential music platform for new and developing artists. For ten years, SoundCloud has been the birthplace of genre-breaking musical movements in electronica and hip hop. We are excited to partner with Temasek on this investment and are confident our involvement can ensure it remains the most artist-friendly music creation and streaming platform in the world”.[from http://ift.tt/2lvivLP]