A new filing at Companies House (UK), as reported by Music Business News, said that SoundCloud suffered losses of €51 million euros ($53.84 million USD) in 2015 and could “run out of cash” before the end of this year. This news comes days after reports suggesting Google is considering purchasing the music streaming service.
SoundCloud co-founder Alexander Ljung said in the report that the company’s future is hinged on the success of SoundCloud Go, the company’s music subscription service launched last year in the US, UK, and Germany. “The assumption of a successful launch of the new subscription service is the key element of [our] financial projections for the next three years… [This] bears financial risks regarding the operating results and cash flows of the group.”
Ljung also said this may require SoundCloud to raise more money to offset any negative impact on “the ability of the group to generate sufficient cash… Whilst the directors believe that the Group will have sufficient funds to continue to meet its liabilities through 31 December 2017, the risks and uncertainties may cause the company to run out of cash earlier than that date, and would require the Group to raise additional funds which are not currently planned.”
SoundCloud Ltd’s revenues jumped 21.6% to €21.1m ($22m) in 2015, with net losses accelerating 30.9% to €51.22m ($52m). That’s even higher than 2014, a year when the company lost €39.14m ($44.19m). It’s not all dismal, though: the company’s workforce increased 25% in 2015, with average annual salaries of €90,729 ($95k). Music Business Worldwide also confirmed that three majors, Universal, Sony, and Warner, all own stakes in SoundCloud.
Reached over email, a representative for SoundCloud provided the following statement to The FADER:
“SoundCloud filed its 2015 accounts with Companies House in December, and they are now publicly available on their site as of today. The accounts show that, in 2015, we were heavily focused on putting the necessary measures in place to build out our monetization model, including our consumer subscription service, SoundCloud Go, and roll-out of advertising on the platform. This meant investing in technology, people and marketing, as well as securing complex licensing agreements with key music industry partners. As such, the company remained unprofitable.
“In 2016, we saw solid growth not only for the industry but for SoundCloud too. And we see this trend continuing throughout 2017. To date, we have successfully launched SoundCloud Go subscription service and our ads business in eight markets, including the US, UK, Ireland, France, Australia, New Zealand, Canada and Germany and we are on a very positive path to achieving our aim of enabling all creators to be paid for their work, while also building a financially sustainable platform where our connected community of creators, listeners and curators can continue to thrive.”
This article was found on thefader.com