SoundCloud CEO Confident Premium Service Will Launch This Year, Warns Against Killing Freemium
Despite a few hurdles still in front of them, SoundCloud's plan to launch a premium subscription service in 2015 is still a go, according to founder and CEO Alexander Ljung. The company has yet to reach licensing agreements with two out of three majors -- an impasse with Sony has led to numerous takedowns -- but Ljung was positively positive about SoundCloud's next big step during a recent interview at the IMS conference in Ibiza.
Topics ranged from copyrights to monetization, but in the meatiest section of his interview, Ljung warned that people advocating for an end to ad-supported streaming are going about it all wrong.
"[Music] is basically a product that every person wants," he said. "And how can be that something with that much emotional power, that much engagement and that much audience has so little revenues. That's the big, overall question. And what I think people are looking at now is the idea of the value of content and the degree to which you can monetize it."
Watch the full interview and read highlights below:
Copyright is complicated: In some ways I think you can get lost in thinking about the complexities and the challenges of copyright and we can spend hours talking about it. On one level, it's simple. Copyright is about safeguarding creativity and creating a protection from artists and for people to be creative. It's not a strict set of rules of you can do this or you can't do that. In general it's a principle that says, how do we foster creativity and ultimately the challenge is ultimately we just want to know what the original creator wants with the track. If there was clarity around that, life would be easy.
Thoughts on the ad-supported streaming model: There are a lot of headlines saying that person or this person doesn't support free, on-demand streaming. I think that's not quite the issue. I think the big issue is that we're all looking at one big challenge, which is this: music is one of the more important things that exists in the world in life, period. It's one of the most compelling things for every single person in the world. There's virtually no people in the world that don't say music is a significant part of their lives. So if you translate that into a business perspective, it's basically a product that every person wants. And how can it be that something with that much emotional power, that much engagement and that much audience has so little revenues. That's the big, overall question. And what I think people are looking at now is the idea of the value of content and the degree to which you can monetize it. Where in many discussion you hear people saying, we went from CDs monetize better than downloads, then downloads monetize better than subscription, then subscription monetize better than advertising. If you look at subscription, it does pay better than advertising. But it doesn't mean you can get everybody into a subscription. Just because you can get a higher price from somebody, doesn't mean you can get that price from everybody. I think that sometimes there's a perspective that if we would not have ad-supported, it would all be in subscription. Which is not a useful way of thinking because it's not going to happen. So the solve is very straight forward, it's a mix between ad-supported and subscription. But the challenge for us as an industry is where do we draw the line between the two. How do we segment users between ads and subs… it doesn't make sense to look at a world that is only subscription or that would only be advertising.
When will Soundcloud's subscription service launch? This year… We have our path mapped out and we're working away at that. It's an incredibly interesting time for music overall. There's a lot of players making big bets at the moment and lot of opinions on where things should land. I think that's on the industry level. I think we're also at a point where there's more creativity than before and a desire to accept that creativity especially around derivative content. There's an excitement around the industry to create something.