×
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.

 

Popular on Variety

More Digital

  • Google Assistant example

    How Google Found Its Voice

    A few years back, Google was actively exploring whether it should launch a male counterpart to Amazon’s female Alexa voice assistant. “When we first launched the Google Assistant, we intended to use a male voice, just to be different,” recalled Google Assistant product manager Brant Ward recently. However, at the time, text-to-speech technology was still [...]

  • Podium Publishing Taps Scott P. Dickey

    Podium Publishing Taps Scott P. Dickey as Chief Executive Officer

    Independent audiobook publisher Podium Publishing has selected veteran media executive Scott P. Dickey as chief executive officer. Greg Lawrence, former CEO and co-founder,  remains as Podium’s publisher and a member of the board of directors. As CEO, Dickey will set and implement the day-to-day and long-term marketing, production and business strategy for the company as [...]

  • "The Stockholm Syndrome" - Pictured: Rajesh

    Inside the Blockbuster $600 Million 'Big Bang Theory' Streaming Deal With HBO Max

    As one of TV’s most popular shows of the past 20 years, “The Big Bang Theory” was sure to command a huge price when the streaming rights were finally shopped in a red-hot market for iconic comedies with large libraries. But “Big Bang Theory” wasn’t shopped widely on the open market before the streaming pact [...]

  • Mark Zuckerberg Facebook

    Mark Zuckerberg Can Be Overruled by Facebook's New Oversight Board on Content Decisions

    Mark Zuckerberg, chairman and CEO of Facebook, can’t be ousted by investors — he owns a controlling interest in the company’s voting shares. But according to the social giant, the new Oversight Board — colloquially called Facebook’s “Supreme Court” — that it is setting up to adjudicate appeals about whether to leave up or take [...]

  • YouTube - Google UK Offices

    Google Launches Ability to Find Key Moments in YouTube Videos via Search

    Google has introduced a new way to find exact moments in YouTube videos through its search engine, with initial partners including CBS Sports. According to Google, search results now will provide links to key moments within the video — if, that is, YouTube content creators have provided the necessary timestamp information to Google. “You’ll be [...]

  • Spotify logo is presented on a

    Spotify VP Paul Vogel Talks Subscription Prices, Label Licenses, Podcasts

    The annual Goldman Sachs Communacopia Conference gives representatives from major companies the opportunity to present to the investment community, and Paul Vogel, Spotify’s VP and head of financial planning & analysis, treasury and investor relations, spoke on the streaming giant’s behalf on Tuesday morning. While many of his comments were statements frequently heard in the [...]

  • Directv Now

    AT&T Sued for Allegedly Creating Bogus DirecTV Now Accounts

    A group of investors sued AT&T, alleging the telco artificially inflated subscriber counts for its DirecTV Now streaming service — including by creating fake accounts. In the federal class-action lawsuit, the plaintiffs allege that AT&T wanted to make DirecTV Now seem more successful than it actually was as another way to rationalize its $85 billion [...]

More From Our Brands

Access exclusive content