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Business News Deals Digital Media
Sirius pumps $75 million into SoundCloud
By Chris Cooke | Published on Wednesday 12 February 2020
US satellite radio firm SiriusXM yesterday announced that it was investing $75 million into SoundCloud. It’s a deal that gives the broadcaster a minority stake in and two seats on the board of the SoundCloud company.
Confirming and bigging up the new investment, SiriusXM’s CEO Jim Meyer said: “SoundCloud’s unique platform serves a vital role in today’s music ecosystem where new artists are discovered and build their fanbase, and established artists experiment and connect directly with their fans in highly effective ways”.
“We admire SoundCloud’s loyal and growing audience, its offering for creators, and its reputation and popularity in global music communities”, he went on. “We believe this is another opportunity to continue creating value for SiriusXM stockholders by investing in expanding digital audio platforms”.
Sirius is already in the online audio space, of course, as the owner of US personalised radio service Pandora, which it acquired outright in 2018, after becoming a shareholder the previous year. And through Pandora, Sirius had a pre-existing relationship with SoundCloud, the latter have allied with Pandora last year on advertising sales in the US.
The new investment comes just three years after the SoundCloud company was on the verge of collapse as it struggled to generate significant revenues despite is significant userbase. Back then it was a $169.5 million cash injection from boutique bank The Raine Group and Singapore’s state investment fund Temasek that enabled SoundCloud to stay in business. More recently, the former was also involved in securing the Sirius backing.
Since 2017, SoundCloud has sought to grow its advertising business, while also putting a new focus on its original core product, ie the provision of digital tools for content creators.
The backing of The Raine Group and Temasek certainly bought the company some much needed stability, although it continues to operate in a very competitive marketplace. Plenty of other major players and start-ups continue to go after its three main revenue streams, ie online advertising, music subscriptions and content distribution.
Meanwhile, having been a go-to platform for podcasters during the rise of podcasting, it has lost ground in that domain as other tech and media firms have jumped on the bandwagon.
Nevertheless, CEO Kerry Trainor remains optimistic about the company’s future, saying: “SoundCloud’s three consecutive years of strong financial performance directly reflect the success of our creator-led growth strategy. We have an exciting roadmap focused on deepening the connections between creators and listeners that fuel creator discovery, career growth and the evolution of music culture on SoundCloud”.
On the Sirius deal, he went on: “We’ve built a great relationship with SiriusXM through our highly successful Pandora ad sales agreement, and their investment gives us added capital flexibility to accelerate our vision and take advantage of strategic opportunities as they arise”.
