sound cloud is reducing its current global headcount by 8%, in a move that would result in some 40 layoffs at the company.
It is understood that the majority of layoffs at the company will take place in the US.
The news was confirmed today (May 23) in an internal memo sent to employees from SoundCloud CEO, Eliah Setonobtained by MBW.
Seton pointed to SoundCloud’s longstanding ambition to become profitable as a factor in the reorganization.
Calling employee layoffs “the hardest thing we can do in our business,” Seton’s memo continued: “This was a challenging but necessary decision to ensure the health of our business and make SoundCloud profitable this year. In doing so, we are securing the future of the company for the millions of artists who rely on us for their livelihood and expression, and the millions of fans who come to SoundCloud for the pleasure of music.
“It is important to ensure that SoundCloud thrives on its mission to influence culture, to be the preeminent home for artists and fans, and to lead what comes next in music.”
SoundCloud’s latest fallback round comes nine months later the company had reduced its global number of employees at that time around 20% under the CEO, Michael Weissman.
Sources close to SoundCloud’s investors recently told MBW that the company – which includes current shareholders SiriusXM and Raine Group – are in the preliminary stages of exploring a potential investment event, or even a sale, in the next 12 months.
A move from the company to accelerate the path to profitability would certainly fit that idea.
The last major investment event at SoundCloud saw SiriusXM holding a minority stake in the company in the first quarter of 2020via USD 75 million USD agree.
(Coincidentally, SiriusXM is also nearby cut 8% of the global workforce in a redundant loop.)
According to recent press releases, SoundCloud’s service is now hosting more than 320 million won song from 40 million won artist.
In the most recently published annual financial results – for the calendar year 2021 (two years ago) – SoundCloud, with headquarters in Germany, posted 230.7 million euros ($273 million) IN annual revenueupward 19.2% annually.
The company’s gross profit for the year increased 33.7% annually ARRIVE 81.7 million euros ($97 million)but its annual operating loss has grown 21.1 million euros ($25 million) from €15.4 million in the previous year.
Regarding those growing losses, SoundCloud explained in its annual financial filing for 2021: “Significant investments were made in our operational infrastructure in 2021, including including the re-engineering of the executive team with new executives with experience from the music and entertainment industries.
“Furthermore, marketing spend has increased significantly (+70%) to drive targeted revenue growth, but [that spend] planned a little bit.”
In December 2022, SoundCloud’s Eliah Seton told MBW: “We really believe that the next big format for the music business is fandom. Today’s music business is not suitable for most artists; Streaming alone is not enough [financially] for most artists.
“Optimizing and commercializing the fandom will be paramount to opening up a music business that do works for most artists.
SoundCloud’s recent moves have seen the company double down on this strategy.
Earlier this month, SoundCloud announced a new deal with Merlin this will allow members of the organization to later participate in SoundCloud’s fan-powered royalty (FPR) model.
FPR, an example of a ‘user-centric’ royalty model, allocates only a portion of each listener’s advertising and subscription revenue to the artists/tracks they listen to individually.
Merlin members include Entertainment, Music Cinqplatform communication, IDOL, secretSymphonic Distribution and Too Lost are both participating in the SoundCloud FPR program.
SoundCloud has previously signed an agreement with Warner Music Corporation allows WMG labels and artists to be royalty paid from the platform through FPR.
Another “fandom”-focused announcement from SoundCloud also appeared last month, when the company perfected its ‘Fans’ tool.
Used in beta by 10,000 won artist – included Warner Music Corporation artists – Fans enable direct message (DM) action to die-hard fans with the option to attach music to these communications.
Fan growth has been led by former Twitch and Spotify managing director Tracy Trancurrently SVP of SoundCloud’s Creators business.
In other recent news at SoundCloud, MBW discovered last month that Lauren Wirtzer-Seawood, the company’s Chief Content & Marketing Officer since 2021, is leave the company.Global Music Business
