SoundCloud May Have to Raise More Money This Year

SoundCloud May Have to Raise More Money This Year

Foto: Fotolia

Online music company SoundCloud warned that if a music subscription service it introduced last year doesn’t gain traction with customers it risks running out of money, according to Bloomberg. In a regulatory filing published in the U.K., SoundCloud said that while it believes it has enough funds to make it through 2017, if the subscription service doesn’t take off it may raise "material uncertainty" about the company’s "ability to continue as a going concern," the filing said. SoundCloud said it may have to raise additional funds to meet its financial obligations.

Underpinning the challenge is SoundCloud’s release last year of a $9.99 per month subscription service, an attempt to better compete against larger rivals Spotify and Apple. The service’s debut was delayed for about two years due to a lack of licensing agreements with the world’s biggest record labels and adoption has been muted since it launched in March. The subscription is available in the U.S., U.K. and Germany. Music industry analyst Mark Mulligan estimates SoundCloud has roughly 250,000 subscribers for the service, compared with more than 40 million for Spotify and 20 million for Apple.

SoundCloud has explored a sale of the company, including having talks with Spotify that recently stalled, according to a person familiar with the discussions. Since its founding in 2007, SoundCloud has attracted 175 million users with more than 135 million tracks of easy-to-share remixes, podcasts and other user-generated content. The challenge has been turning that user base into a profitable business.

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