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Business News Digital Labels & Publishers
SoundCloud chief muses on the need to balance freemium and premium services
By Chris Cooke | Published on Monday 21 September 2015
The boss of SoundCloud has been chit chatting to Billboard as speculation continues about the future of his company. On one side it has deals in place with Warner and the indies to try to monetise its large community of music fans, but at the same time faces ongoing criticism from at least one major record company and a potentially crippling legal action from UK collecting society PRS For Music.
Like YouTube, SoundCloud remains an important marketing channel for the music industry. It boasts a large community of early adopters who latch on to new artists and new tracks, and then help with the promotional process by sharing them on blogs and social media, and probably subsequently listening to the same music on Spotify et al, creating the early listening stats that drive the paid-for streaming services’ all-important playlists.
But many in the music community remain critical of SoundCloud for having taken so long to get round to doing licensing deals with the labels, publishers and collecting societies, while others wonder whether the digital firm’s current plans to go legit via new ad-funded and subscription levels can really work commercially, especially while some rights holders seek to hold the company to ransom over past alleged copyright infringement (“alleged” depending on your interpretation of the safe harbours in copyright law, of course).
Insisting that, despite Sony and possibly Universal still not playing ball, many labels are now seeking to collaborate with SoundCloud on its monetisation plans, CEO Alexander Ljung argues that the music industry has to find a way to balance freemium with premium; that is to say, still service the billions of consumers who will never directly pay for streaming music, while maximising revenues from the hundreds of millions who might go premium.
He says to Billboard that “there has been a lot of noise in different articles with pull quotes from people saying ‘freemium is the only way’ or ‘we don’t believe in free streaming’. But it’s not about only music subscriptions or only free on-demand streaming. People need to recognise two things: One is that music is important for almost everyone on the planet, meaning there are potentially billions of customers, and also that it’s going to be a real struggle to get billions of people into a subscription service”.
He goes on: “So if you want to monetise billions of people, you need both ad-supported and subscription [models] to work. The question is, how can you make that work without giving everything away for free? For us, it’s about giving creators multiple tools for monetisation”. He’s right, of course, though whether SoundCloud has the model, the support and the resources to make that happen remains to be seen.
But Ljung, who maintains that his company’s monetisation plans are part of the long-game evolution of SoundCloud – and not a change in direction motivated by investor and rights owner pressure – remains outwardly optimistic that his business is onto something. “From the beginning, we built great tools for creators, and then we started building a community. We’re layering monetisation opportunities on top of that”.
Read the full interview here.
