How SoundCloud Lost Its Way
Soundcloud was officially announced to the world in August 2007. What began as a platform built for artists and music enthusiasts has transformed into one of the largest music streaming platforms in the world despite having not signed a major label until last year. Soundcloud seemed like the genesis of the internet’s transformative effects on the music industry. Why then in 2015 does Soundcloud already feel so misguided?
Before I dive into this I have a disclaimer: Soundcloud has been my go-to music discovery platform for over 6 years now. I used to be on for 3+ hours a day just searching for music. But after so much time on the platform, I began to realize that I just couldn’t possibly stay so invested in a service that constantly created roadblocks for an enjoyable listening experience. This year I’ll be launching a music discovery platform that touches upon the pain points of my love/hate relationship.
In 2001, the future of the music industry began to reveal itself ever so slightly. Napster had just taken a wrecking ball to the legacy distribution model that the record labels had built up over the previous 50 years — using radio as the match and typically published advertising as the fire — and so the scramble for a fix began. It wasn’t necessarily that people would stop buying records immediately, it was that for the first time in history there was another option. When Apple came to labels with its plans for iTunes, they quickly realized it might be their only weapon against piracy. Within five years, it was the largest music retailer in the world. Small transformations like this were happening across other media industries as well, Netflix had delivered hundreds of millions of DVD and most major news publications had launched digital versions of their work. In 2007, another major shift began. When the iPhone was revealed it was hailed as an incredible new way to interact with your phone. What was less discussed was the fact that the next generation would grow up with an extremely powerful computer in their pocket and 24/7 access to the Internet. But this is all getting out of hand because what we’re really here to discuss is Soundcloud.
Although Soundcloud grew at a nice pace, it took about 3 years before they announced that they had reached 1 million users. While there was certainly a sizable market listening to music online, the majority of people still consumed music in the same way as their grandparents, albeit in a digital form. The only true difference was singles. With the ability to purchase singles for $0.99, Apple created a new form of music purchase behavior. Realistically, it was Napster that introduced this model but I’ll let Apple take credit for making it financially viable. Instead of having to buy the whole album just for your favorite few songs, listeners could hear songs on the radio or listen to iTunes previews and then decide which ones were worth their money. This perfectly reflected the effect that the internet had on people’s expectations. If we can have access to the internet when and where we want it, why can’t we have access to the media we want here and now? Services like Spotify perfectly satisfied this mentality but the record industry was slow (and still is) to fully adopt the new mediums. The difference for Soundcloud was that it was built in stark contrast to the label’s model. Independent artists could pay a relatively small premium to be able to host their work online. In return for paying to have their content hosted, these artists would technically have access to a global audience of music lovers all searching for the next big song or artist. I say technically here because this still relied on those music lovers actually being able to find those songs and artists without pulling their hair out. At this point, it probably sounds like Soundcloud was in an ideal position to capture the next generation of music listeners. Here’s the problem: That second, essential, part where the music lovers find music they love and then share it has become a miserable process of finding needles in haystacks. And these are stacks that grow by 12 hours of audio every single minute.
Over the past five or so years, and mostly in the past two, music streaming has rapidly increased in audience almost as quickly as music purchases have declined. This year, we finally saw this trend clearly when Warner Music announced that their revenue from streaming had surpassed that of downloads. Pandora, Spotify and Apple Music (just to name a few) have captured millions of listeners working under similar presumptions about people wanting simple and relatively cheap access the world’s music. To be fair, Soundcloud announced in March that they were pulling around 175 million monthly listeners. What I don’t expect them to announce is that in my personal experience, 99% of users are fed up with listening to 25 bad tracks just to find a song worth listening to. I just don’t think the hype can last when the experience creates so much friction for even the most dedicated of music hunters.
Therein lies the issue. While Soundcloud is certainly widely used and continues to be a solid platform for artists, it has failed to create a great experience for the listeners, the curators — the people who turned it from cloud storage for musicians into a streaming platform.
I’m not necessarily saying Soundcloud is doomed, although it does face some very large, very well funded competition. What I am saying is that they need to, in the wise words of many of my favorite rappers, pick a lane. If Soundcloud wants to be the ideal artist cloud service, it will need to significantly increase its feature set to meet the needs of (mostly) independent musicians. Particularly, there must be a fix for these artists who contribute their time, creativity and energy to make money on songs they currently make next to zero on. If I were soundcloud I would create the absolute perfect destination for artists to host their content and essentially become a music encyclopedia — somewhere that news outlets, apps etc could pay for the rights to everything an artist has to offer. This isn’t just music, it could be lyrics, biographies, touring schedules and more.
If Soundcloud wants to go the other, much more competitive route, subscription streaming (which they have already publicly stated they are), they will need to figure out a brand new strategy. Discovery and sharing must be made a priority. No, I’m not talking about reposts onto a clusterf — k of a feed, I’m talking about a complete overhaul. Pandora is the most popular (audience wise) for one reason — there is nearly no friction between clicking play and hearing (mostly) good music. Ok, they also have a free tier. But the same factors explain Spotify’s success. For the music lovers who need more freedom of choice but minimal distractions, Spotify makes perfect sense. If Soundcloud wants to prove itself as a worthwhile platform they are going to need to make these decisions quickly. And, even when they do decide on a purpose, they’ll still need to earn back the love that users like me have been forced to abandon.
I think the music industry has a lot to benefit from Soundcloud’s take on distribution but not until some major changes are made from within. They must pick a lane, and soon.
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