Careers at SoundCloud
SoundCloud’s mission is to enable anyone to create sounds and share them everywhere.
As a teen in Sweden, Alexander Ljung had a strong interest in technology and music, with a dream of becoming a sound engineer. He produced an album that led to a job at a post-production studio. In college he changed his direction, studying human-computer interaction with plans to become a researcher. Then one day he met fellow student Eric Wahlforss, and his plans changed again.
Ljung was in a class and having difficulty with his computer. He approached Wahlforss, the only other student with a Mac. They discovered a shared love of music, which enabled them to bond. They began working on many projects at school, one of which was to interview social Internet pioneers for a book on online sociology. During this task, they were inspired to pursue entrepreneurship.
The two brainstormed ideas, and realized that one of the things that bothered them was the difficulty posed by online collaboration on music between various parties. They wanted to design something that would operate similar to Flickr or Vimeo – a service making it simple for anyone to create and share. So in 2007 they founded SoundCloud, an online audio distribution platform.
SoundCloud initially allowed musicians to upload, record, and share music with each other. However, over time, it developed into a complete publishing tool facilitating public distribution. This made it popular among up-and-coming artists, DJs, and podcasters. Within a short time, it was able to attract significant funding, and challenged the dominant status of MySpace as a music dissemination tool.
Business model of SoundCloud
SoundCloud has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate: music artists who want to distribute their music and consumers who want to hear it.
SoundCloud offers six primary value propositions: accessibility, pricing, customization, performance, risk reduction, and brand/status.
The company creates accessibility by enabling music artists to find audiences with whom they can share their work. It also increases access by allowing performers to embed their files on social media sites such as Facebook and Twitter so that their songs can be heard through those platforms. Lastly, SoundCloud supports AIFF, FLAC, WAV, ALAC, MP2, OGG, MP3, AMR, AAC, and WMA files.
The company offers a pricing value proposition. Consumers can utilize a free option or purchase a paid subscription for only $9.99 a month. It offers a 30-day free trial for the premium version. Artists are also charged low fees -- $7 per month for a basic version and $15 a month for the premium one.
The company creates customization by allowing consumers to build playlists of their music. Artists can choose to share their songs privately or publicly with blogs, social networks, and other websites.
The company has demonstrated strong performance through tangible results. It has partnered with various brands to assist them in promoting their offerings through music-related efforts. High-profile examples of positive outcomes for these partners include the following:
- Asics used SoundCloud’s solution to create the Go Run It playlist as part of its promotion for the Gel-Quantum 360 shoe, resulting in a 30% increase in plays and 4,500 profile followers
- AXE: White Label used SoundCloud’s solution to create two “Classical Remixes” as part of a marketing effort, resulting in more than a million branded track plays
The company reduces risk by helping to ensure security. It maintains the SoundCloud Status Blog, which provides up-to-date information on system availability, changes, and maintenance.
The company has established a powerful brand due to its success. It bills itself as the world’s leading social sound platform, drawing more than 175 million monthly users worldwide. It attracts more than 82 million monthly users in the U.S., reaching over 25% of the mobile population. Its artists upload an average of 12 hours of audio per minute, and its artist membership is evenly divided between up-and-coming performers and established musicians. Lastly, it offers access to over 135 million tracks.
SoundCloud’s main channel is its website, through which it acquires most customers. The company promotes its offering through its social media pages, advertising, and participation in conferences.
SoundCloud’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees.
The company’s website provides answers to frequently asked questions. That said, there is a personal assistance component in the form of phone, e-mail, and social media support and a community element in the form of a forum.
SoundCloud’s business model entails maintaining a robust common platform between two parties: music artists and music listeners. The platform includes its website and mobile app.
SoundCloud partners with brands to produce music-related promotions in order to help them market their offerings. Specific partners include Amazon, HBO, Jaguar, Jeep, Microsoft, Netflix, Pepsi, Red Bull, Sonos, Sony Pictures, Starbucks, Target, Taco Bell, and Warner Bros.
SoundCloud’s main resource is its proprietary software platform, which serves over 175 million users.
It depends on its engineering employees to maintain the platform and its customer service staff to provide support.
As a startup it has relied heavily on funding from outside parties, raising $228.32 million from 10 investors as of June 2016.
SoundCloud has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions.
Its biggest cost driver is likely transaction expenses, a fixed cost. Other major drivers are in the areas of customer support/operations and sales/marketing, both fixed expenses.
SoundCloud has two revenue streams:
Subscription Revenues – Revenues generated from the following:
- Artist Subscriptions - The company charges artists to upload and share their music on a monthly or annual basis. Fees are $7 per month or $63 per year for the basic edition (SoundCloud Pro), and $15 per month or $135 per year for the premium edition (SoundCloud Pro Unlimited).
- Consumer Subscriptions – The company charges consumers to access the music provided by artists. The basic edition is free, but fees are $9.99 month for the premium edition, called SoundCloud Go.
Advertising Revenues – Revenues generated from fees charged to third parties to advertise their offerings on the company’s platform. Ad options include audio, display, native, and sponsorship opportunities.
info: Alexander earned an M.Sc. degree in Media Technology at The Royal Institute of Technology in Stockholm and studied Marketing at the Stockholm School of Economics. He previously worked as a post-production sound designer.
info: Eric earned an M.Sc degree in Industrial Economics at the Royal Institute of Technology in Stockholm and also studied at the Stockholm School of Economics. He previously served as an Interaction Designer at Gate5.
info: Alison earned a B.A. in Political Science at the University of Georgia. She previously served as an SVP at NBC Universal, as the Director of Brand Development at Home Box Office, and as a Co-Founder and VP of Market Development at DatSat.
info: Marc earned an MBA at WHU – Otto Beisheim School of Management. He previously served as the Director Marketplaces & Payment Innovation at PayPal, an Investment Director at ECONA, and a Managing Director at UNIMALL.
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