SoundCloud Go subscribers have access to full albums from major label and indie artists, and also get to listen to any of the other content already on SoundCloud without any ads. “It’s a deeper, better SoundCloud,” said co-founder and CTO Eric Wahlforss.
The subscription service will initially just be available in the U.S., and cost consumers $9.99 per month after a 30-day trial — which happens to be the same amount that Spotify, Apple Music and others are charging as well. And just like those competitors, SoundCloud is also offering offline listening functionality.
However, the company hopes to differentiate itself from the competition by mixing the same catalog that everyone else is licensing from major and indie labels with uploads supplied by DJs, podcasters, unsigned bands and even fans. Altogether, SoundCloud offers subscribers some 125 million tracks. “We are a very unique service,” said Wahlforss. “For the first time in history, you can now listen to all of this content.”
But SoundCloud doesn’t just have a bigger catalog — it also offers a different approach to monetization of music than most of its competitors. The music industry has long been struggling with the question of how much content it should make available for free. Some executives, most notably at major labels and their trade organizations, believe that free streaming devalues music. Others think that free tiers are necessary to up-sell users to paid products.
The most prominent proponent of that approach is Spotify, which now has more than 30 million paying customers. Spotify offers all of its catalog to its users for free, but consumers have to pay if they want to pick and choose individual songs on mobile, or listen to music without ads. On the other side of the spectrum is Apple Music, which forces users to pay for any listening after its 90-day free trial.
SoundCloud’s approach is different from the get-go in that it leaves it up to labels to decide how much of their catalog they’re going to make available for free, ad-supported listening. The risk is that labels may decide to keep most of their crown jewels behind the pay gate, but Wahlforss seemed confident that free users won’t be missing out entirely either. “Over time, there will be more ad-supported content on the platform,” he said.
That’s because of a second key difference: Eventually, SoundCloud will also allow labels to share ad revenue for DJ sets, fan uploads and other content that’s currently falling through the cracks. “Over time, this gives us a path to monetize all of SoundCloud,” said Wahlforss.
Sounds familiar? That’s because YouTube has been monetizing video content in much the same way for years. The big difference is that YouTube didn’t launch its own subscription service until late last year, and is still mostly focused on advertising revenue. Wahlforss argued that SoundCloud may one day make most of its money with subscriptions, but also grow a very healthy ad business. “The key is to have both,” he said.
However, to get there, SoundCloud has to not just grow, but grow up. The service may be popular among some users, but is still very much unknown among others, especially in the U.S. “Marketing will be a bigger focus for us,” promised Wahlforss, while also suggesting that the company will expand the subscription tier to additional countries soon. “SoundCloud is a global platform,” he said.
SoundCloud also has to make some serious investments into its app and discovery to catch up to the competition. As of now, SoundCloud’s app is still best suited to listen to longer DJ sets, or individual tracks. The service recently added a radio mode to make it easier to listen non-stop in a Pandora-like lean-back mode, but finding and navigating through entire albums is still a bit of a chore. Wahlforss promised that search and social discovery are both problems the company aims to attack next.
To do so and win over enough paying customers may take time, and money. Last month, the company’s 2014 financials surfaced, showing significant losses. Wahlforss downplayed those numbers as outdated, explaining that SoundCloud had since raised new funding, and grown its ad business. “I’m not at all worried about the financials of the business,” he said.