In an attempt to monetise its users the popular music streaming service Soundcloud is to start showing adverts and licensing services. The first time the service has tried such a move. While the service will still be free to users, will it lose some of its attractiveness to emerging artists who favour the platform?
Clearly the exposure to 350 million active uses is attractive to some brands. Soundcloud has already signed deals with large brands such as Red Bull, Sonos, Squarespace, Jaguar and Comedy Central. Adverts will take a similar role to those found on YouTube and Spotify and precede the content you want to listen to.
They have also negotiated licensing deals with large labels and also independent artists to collect royalties as part of its “ON Soundcloud” streaming service. Aimed at artists being able to earn money for their work, the service will have two payment tiers and also a free service. Allowing those just starting out to share their music with others supported by adverts.
Soundcloud does already generate income from its most active users, turning over £8million in 2012. However this is clearly not enough with a £12.4million loss being the end result. This put off a possible investment from Twitter when investors voiced major concerns over the long term value of the investment.
The introduction of advertising is an important step for creators. Every time you see or hear an ad, an artist gets paid. If you’re in the US, you’ll start to experience occasional ads from our brand partners. We’re bringing ads on gradually. In addition to supporting creators, ads will keep the service free and open for people to listen to SoundCloud. – SoundCloud
There is a worry that by Soundcloud attempting to monetise the users and allow artists to receive royalties the service will be less attractive. Users are drawn due to the ad free nature compared to its two main competitors YouTube and Spotify. Might the next move be user’s subscriptions in order to remove the adverts?
Are any of our readers budding artists on Soundcloud. We would love to hear your opinions in the comments or on your social media of choice.