×
You will be redirected back to your article in seconds

SoundCloud CEO May Step Down as Part of New Investment Deal

As the troubled streaming service SoundCloud appears on the verge of investment from two private equity firms, media reports say that the new investors are eying former Vimeo CEO Kerry Trainor to replace cofounder and current CEO Alexander Ljung, who would helm the company’s board. Trainor would recruit a new chief operating officer, Recode reported, citing investor documents.

Under the deal, the music streaming platform is set to receive nearly $170 million from the Raine Group and Singapore’s Temasek. In a message to investors, Ljung warned that the company could cease to “continue as a going concern” if the deal does not close today (Aug. 11).

SoundCloud investors were informed of the deal Tuesday. Some existing institutional investors will also participate in the new funding, which is set to close Friday. Axios was first to report on the new cash infusion Thursday morning, and Variety was able to confirm the new funding with a source close to the company.

Under the deal, the new investors will acquire more than 50 percent of the company, which recently had its valuation slashed to $150 million. In 2014, the company was in talks to sell itself to Twitter for more than $1 billion.

Reps for SoundCloud did not immediately respond to Variety‘s request for comment or confirmation.

The reports were the latest in a tumultuous few months for the popular but financially challenged company, which has undergone an awkward transition from a free service to a partially paid one.

Shortly after the company laid off 40 percent of its staff and closed two offices early in July, a report in TechCrunch claimed that the company, which the founders warned early in the year may not have enough money to see it through the end of 2017, may not have enough cash to see it through the end of the summer.

SoundCloud responded with a statement in which it said in part: “There are a number of inaccuracies within the TechCrunch article. They seem to stem from a misinterpretation of information by one or two laid off employees during a recent all hands meeting … To clarify, SoundCloud is fully funded into the fourth quarter.”

In July, Chance the Rapper issued a pair of tweets publicly supporting the company that initially seemed to indicate he would be providing some kind of financial sustenance, but a SoundCloud rep emphasized to Variety that his contribution was purely moral support. Hours later, a blog post from co-founder Alexander Ljung claimed the company was “safe.”

Founded in 2008 by Ljung and partner Eric Wahlforss, the platform was originally established as a site for DJs to upload their mixes and quickly became a favorite destination for all kinds of musicians, as well as labels seeking a fast and easy way to circulate music quickly. Yet licensing and royalty challenges forced the company to become a more traditional streaming service and it has struggled in its efforts to encourage users to opt for its paid premium model — a crowded field that even Apple Music has found daunting.

 

More Digital

  • U.K. Producer Barcroft Studios Sold to

    U.K.-Based Producer Barcroft Studios Sold to Future in $30 Million Deal

    Barcroft Studios has been bought by Future in a £23.5 million ($30.1 million) deal. The U.K.-based production outfit specializes in factual fare for channels and platforms, and its own branded channels on the likes of YouTube. Future is a U.K.-listed print and online publishing and events business. Sam Barcroft will stay on as CEO at [...]

  • Tye Sheridan

    Tye Sheridan Starring in Survival Thriller 'Wireless' From Steven Soderbergh for Quibi

    Quibi has ordered another show with notable Hollywood talent attached: scripted series “Wireless” starring Tye Sheridan with Steven Soderbergh on board as executive producer. In the made-for-mobile-screens thriller, a smartphone has a central role. Sheridan (“Ready Player One,” “X-Men: Apocalypse”) plays a self-obsessed college student who is stranded in the Colorado mountains after he crashes [...]

  • Instagram

    Instagram Testing Hidden Like Counts Globally

    Like counts will be disappearing from Instagram all over the world starting this week: The Facebook-owned photo sharing service is extending its test of hiding like counts to all of its territories, Techcrunch was first to report Thursday morning. Instagram began hiding like counts for a subset of its users in Canada this spring, and [...]

  • Ted Sarandos - Netflix

    Ted Sarandos Says Disney Plus Launch Changes 'Nothing' for Netflix

    Netflix chief content officer Ted Sarandos claims he’s not getting distracted by huge competitors — like Disney — rumbling into the company’s streaming turf. The exec was asked what has changed for Netflix with the Nov. 12 launch of Disney Plus, which the Mouse House boasted as having signed up over 10 million users so [...]

  • Game Awards OrchestraThe Game Awards, Show,

    Game Awards 2019 to Play on 53 Cinemark Screens Alongside 'Jumanji: The Next Level'

    This year’s Game Awards, recognizing the top video games, creators and esports of 2019, is coming to the silver screen. In a three-way partnership, the Game Awards, Cinemark Theatres and Sony Pictures are teaming on a superticket program pairing the Dec. 12 live simulcast of the 2019 Game Awards in 53 Cinemark locations with a [...]

  • Lilly Burns Tony Hernandez

    Jax Media Soars by Amplifying Unique Voices of Auteur TV

    Jax Media has emerged during the past few years as one of television’s busiest and buzziest production companies. The New York-based company headed by four partners — Tony Hernandez, Lilly Burns, John Skidmore and Brooke Posch — has an enviable track record of scouting new voices and executing stylish shows on a less-than-stratospheric budgets. The [...]

  • Variety Digital New Leaders

    Execs From Endeavor Audio, Group Nine Among Those Leading the Way in Digital

    Every year, Variety seeks to identify the next generation of leaders in the entertainment business, looking for representatives in the creative community, film, TV, music and digital. This year’s group has a heavy New York focus: We selected executives from forward thinking companies such as Spotify, Group Nine and Endeavor Audio, as well as writers [...]

More From Our Brands

Access exclusive content