Popular music streaming platform SoundCloud is currently involved in talks of raising fresh funds to keep its ship afloat in the competitive music streaming ecosystem. But, the Berlin-based company has parted ways with two of its top-level executives — COO Marc Strigel and the finance director Markus Harder. This development was first reported by The Financial Times, but has now been confirmed by Reuters.
The two executives have quit the music streaming giant after more than a five-year-long stint, to work on new ventures of their own. While Harder was responsible for leading the finance (accounting, FP&A, royalties) and IT team, Strigel oversaw cross-functional teams centered around revenue, financial health, and organizational health. There is currently no update on what the two executives plan to do next.
The Financial Times reported that SoundCloud is close to running out of cash and is seeking money in desperation. But, these claims have been termed as completely futile by a company spokesperson, in an electronic statement sent to Reuters. These two sources reported just contradictory viewpoints, citing different sources. The former cited an anonymous German financier, who said,
SoundCloud is begging for money, but I wouldn’t give them any right now. They need to rethink their valuation and settle for a down round.
Whereas the latter cited a SoundCloud spokesperson, who said,
SoundCloud is currently fundraising, which is typical of most startups of our size and in our phase of growth. This [exits] is unrelated to our ‘normal course’ fundraising efforts, which are being led by our recently appointed Chief Financial Officer.
SoundCloud remains in a position of strength and is confident in its long-term prospects as it continues to be the go-to platform for the creative community.
SoundCloud competes with the likes of Apple Music and Spotify for the top spot. It is highly popular among solo artists and bands but it has found it extremely difficult to crack licensing deals with record labels. This route has been adopted by most platforms, even Jay Z’s Tidal, as they’re now looking to increase revenue and profits for both their platform as well as labels.
The German music platform is now looking to raise more capital to avoid accepting a valuation lower than the last time it raised capital. The company had previously raised about $100 million in June 2016 from the likes of Twitter Ventures and Institutional Venture Partners. It is half the funds raised by SoundCloud at its inception in 2008. The company is now ramping up its efforts to show more advertisement to the users on its platforms.
Streaming services are steadily gaining acceptance from the music industry, which can be proven by Chance the Rapper winning the award for Best Rap album at yesterday’s Grammy Awards. The highlight of this statement being that his album ‘Coloring Book’ was only available to users through such streaming platforms. It was the first time the Recording Academy had accepted nominations for streaming-only albums, a change in rules for Grammy eligibility introduced last year.
And things could not be any better as he even gave SoundCloud a shoutout after accepting his Grammy. This will definitely act in favor of the platform, which has been struggling to find its footing. It might also push some investors to accept the growing popularity of streaming apps, which instantly provide you access to fresh music/podcast. The ever-changing music scene, technology, and the millennials could be seen as the prominent drivers of this growth.
