Business News Digital

SoundCloud raising new investment

By | Published on Wednesday 10 December 2014


SoundCloud is busy raising new investment, according to the Wall Street Journal, to help fund the evolution of the digital firm’s business model.

As previously reported, SoundCloud – whose model to date has been to charge content owners for streaming services – is developing an ad platform, which will enable both it and content creators to monetise the audio it streams. A subscription service is also in the pipeline.

The new products are partly designed to please its own investors, but also the record labels, who like SoundCloud as a promotional platform, but have become frustrated over the years that there is no way to monetise tracks on the firm’s site.

Warner Music announced last month that it had signed up to SoundCloud’s new ad and subscription outlets, though rumour has it that negotiations with Sony Music and Universal Music remain slow going.

Though SoundCloud reckons that – because of its existing large user base – it can start to roll out its new ad and subscription services with only a selection of content partners on board, whereas someone wanting to launch a straight Spotify competitor would struggle with out the two big music majors providing their catalogues.

But the new $150 million in financing reportedly being sought could possibly help sweeten deals to get Universal and Sony – and others – on board. Or to get a subscription service off the ground that might require advances to be paid.

The Journal reckons that the new round of fund-raising could result in SoundCloud being valued at $1.2 billion. Which is impressive, though some analysts reckoned that SoundCloud’s already high valuation made rumoured plans by early investors to sell the company to a major player – such as Twitter – all the more tricky to achieve.