Is this the end for SoundCloud?


The past week has been a painful one in the history of SoundCloud – But could it be the end for the music giant?

Back in March this year, Eric Wahlforss, co-founder and CTO of German music streaming company SoundCloud told reporters how important the company’s London base has been for its success. Fast forward to last week and SoundCloud announced that it is shutting down its London and San Francisco offices as part of a wider company restructure, despite revenues more than doubling in the past year. The company’s headcount was also slashed with a massive 173 employees losing their jobs – That’s 40% of their staff! According to sources, the company admitted that it had known for months that it had to cut jobs, but didn’t inform any departments that they should be cutting costs.

Now if you look at the chart below, you can see that while revenue has been increasing over time, so have the losses and the company may have reached a stage where it’s too late to turn back.


Late last year, SoundCloud co-founder and CEO Alexander Ljung warned that if things didn’t improve, the company would be forced to shut down by the end of this year, and reports suggest, it’s possible. According to a report by TechCrunch, SoundCloud has just enough money to keep running for another 50 days. Beyond that, who knows?

Ljung also released the following statement to the public to address any worries for investors/employees and users alike –

Eric and I founded SoundCloud nearly 10 years ago as we saw a need for something that would enable artists to share and connect through music. As we hovered together back in 2008 to push the button that would make SoundCloud live for the entire world, we had no idea the impact our, then tiny, platform would have on the future of music culture, and millions of listeners and artists around the globe.

In the competitive world of music streaming, we’ve spent the last several years growing our business, and more than doubled our revenue in the last 12 months alone. However, we need to ensure our path to long-term, independent success. And in order to do this, it requires cost cutting, continued growth of our existing advertising and subscription revenue streams, and a relentless focus on our unique competitive advantage — artists and creators.

With more focus and a need to think about the long term, comes tough decisions. Today, after careful and painful consideration, we took the difficult step to let go of 173 SoundCloud staffers and consolidated the team into two offices: Berlin and New York. We are extremely grateful for the contributions of each and every staff member who will be leaving SoundCloud, and we wish all of them the best. Without them, we would not be where we are today.

By reducing our costs and continuing our revenue growth, we’re on our path to profitability and in control of SoundCloud’s independent future.

So what does this mean for SoundCloud? The SoundCloud platform listeners and artists love will remain available in more than 190 countries globally. SoundCloud will continue to be the place for what’s new, now and next in music, powered by the world’s most diverse music community. I look forward to sharing more about our future plans in the weeks and months ahead.


All said and done, SoundCloud’s actions have left employees fuming, and for good reason too. A new hire, Vojta Stavik, told TechCrunch that he had been offered a role at SoundCloud that was due to start on July 17, but his job was cancelled on July 7 – just before he had been due to move to Berlin.

Stavik is now considering legal action against SoundCloud, because he says his signed job offer included four weeks’ notice of dismissal. The company, Stavik claims, is now refusing to pay his salary for that period.

Employees have also accused the company of spending too much money on unnecessary expenses and giving the impression that all was okay. Some of SoundCloud’s offices had catered lunches twice a week and had lavishly stocked kitchens and bathrooms, according to a source. When team members joined, they were given company swag, headphones and brand new Apple laptops. Employees were confused how the company was “blowing through money, but now is saying they don’t have any money. People would have made sacrifices, to be honest. It’s a fun company to work at, but there was no indication.”

So what’s next for SoundCloud? We haven’t even begun discussing its rivalry with Spotify, Apple Music and even Amazon now. Will the cloud burst and cause more destruction in its path or does this cloud still have a silver lining?

Sources: TechCrunch, Music Business Worldwide

Header image courtesy

Khushrav Bhada
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