Business

How SoundCloud CEO Kerry Trainor Plans to Stand Out In a Crowded Streaming Space: 'We're Built In a Totally Different Way'

Kerry Trainor
Annie Tritt

Kerry Trainor photographed on Jan. 22, 2020 at SoundCloud in New York.

When Kerry Trainor joined SoundCloud in August 2017, the streaming service’s future was hanging by a thread. The company, which started as a platform where musicians and other users could upload audio content, licensed or not, had kick-started the careers of Chance the Rapper and Lil Uzi Vert. But after years of expenses exceeding revenue — plus a lukewarm reaction to its licensed SoundCloud Go subscription service — the company cut 40% of its staff to stay afloat. Co-founder/CEO Alexander Ljung stepped down, and Fred Davis’ The Raine Group and Singapore-based Temasek Holdings provided a $170 million emergency cash infusion.

But Trainor saw potential in the chaos — specifically in the way SoundCloud could help creators. “That was the whole reason I joined the company,” he says.

Under Trainor, SoundCloud has built even more creator-focused features, allowing artists to reach new listeners and earn revenue. The SoundCloud Premier direct monetization program allows artists to distribute their music to all the major streaming services and receive 100% of the payouts directly. The acquisition of artist services company Repost Network in May 2019 added new distribution and analytics tools. And in November the platform launched Promote, another tool that lets creators place their songs atop listeners’ feeds.

By 2019’s fourth quarter, SoundCloud had gone from the brink of Chapter 11 to stability with three main sources of revenue: creator products/services, consumer subscriptions and advertising. SoundCloud hosts over 200 million unique tracks by 25 million creators across 180 countries.

Working between SoundCloud’s Berlin headquarters and its New York location (where his desk is smack in the middle of the office), Trainor now spends his days leading product development meetings, reviewing marketing plans and, when he can, getting direct feedback from artists. “It’s as simple as, ‘What can we do for you?’?” he says. For example: When Lil Tecca recently came by the New York office to celebrate breaking the record for longest consecutive charting No. 1 song on SoundCloud’s ranking (with “Ransom”), the team gifted him a pair of custom Nike Air Force 1s emblazoned with the SoundCloud logo.

SoundCloud still faces formidable competition from much larger companies, as Spotify, Apple Music and YouTube Music have all introduced their own creator support systems. So Trainor — and SoundCloud — will have to find ways to keep helping artists, even as they try to find more subscribers.

Annie Tritt
Trainor began his music career at online music startup Launch, which issued “CD magazines” featuring interviews with artists. “What got me into digital music was the love of the music,” he says, “and then I fell in love with that reinvention of the experience.”

How do you differentiate SoundCloud from other streaming services in the minds of consumers?
The mass streaming services are doing a great job of providing a clean, clear access point for the established commercial catalog of music. But we’re built in a totally different way. [They’re] built from the consumer experience inward; we’re built from the creators outward. We’re a combination of college radio, the influential clubs and rappers handing out demos out of their cars. We’re much closer to the ground.

What tools do artists use the most on the platform?
Private sharing with people you’re collaborating with. Either you’re in a band, or one of you is a producer or an A&R [executive], and you want to send a demo privately. Examples like that are overlooked, but there is a need. You can also interact and message directly, and get interactive feedback from your fan base. We also give creators access to a robust set of stats; [for example], you might want to know where your most dedicated fans are because that’s an opportunity to think about touring.

What challenges are independent artists facing today and how does SoundCloud help them?
How to get traction and cut through. There’s so much more music in the world, which is a wonderful thing, but it’s a double-edged sword. You have to start with that core fan base — the first thousand fans who are moving an act forward. Finding those fans is something SoundCloud allows you to do in a different way because you can interact directly. You can put your music on any other platform, but to get picked up into playlists, you have to have some traction. We give artists the tools to generate that.

Annie Tritt
The company T-shirt Trainor received on his first day in the Berlin office.

What artists today do you think best exemplify the SoundCloud spirit?
You have Billie Eilish, a “first on SoundCloud” artist [who started her career on the platform], redefining where pop is headed. But on the other hand, you have someone like Lil Tecca, who is just starting to pop out. It’s that spectrum, from young and emerging hip-hop [to] where pop is headed. We want SoundCloud to be as accessible as possible in any way in which people want to express themselves — having that wide spectrum that Billie and Tecca are representative of.

A major artist’s manager once told Billboard, “SoundCloud is like junior varsity — it’s a great way to figure out if you’re good at basketball, but the goal is the NBA.” What’s your response?
For us, it’s all about that full life cycle — we just happen to focus on that earlier stage. But the growth everyone is seeing for the DIY category is really exciting to us. It’s not going to be binary anymore; it’s more of a continuum. Some artists will choose to stay independent longer because they have the opportunity. If an artist wants to sign a deal with a label, we’re extremely supportive of that. We have a unique relationship with labels: We license their music, but we’re also often their source of future stars. Ultimately, artists continue to maintain that home on SoundCloud because, even as their career develops, it’s where their most faithful fans are. They’re not going to abandon that; it’s just going to be complemented by further distribution.

What does SoundCloud offer listeners that sets it apart from Spotify, Apple Music and YouTube Music?
The ability to discover new music easily and interact with the creators you’re excited about. We’re not a social network per se, but we’re the most social and interactive of the streaming services. We have a much younger audience. Remember back to a younger point in your music fandom: You were voracious about finding new music. And that’s a social activity. We want the listener to feel like the creators are actually right behind that profile. And listeners come to us because there’s stuff they can’t find anywhere else, whether that’s demos or live DJ sets.

Annie Tritt
A longtime guitarist, Trainor keeps this one handy as “a reminder of how I ultimately connect,” he says. “It’s a privilege to work on something that you deeply care about.” 

What’s your take on the European Union’s copyright directive that requires content-hosting websites to take responsibility for copyrighted material hosted on their platforms?
We follow that quite closely, and we’re a participant in the process. We have a creator-driven mission — respect for copyright goes hand in hand with that. As the regulatory framework continues to evolve, we’re always going to be a part of that conversation [and] we’re going to continue to evolve the platform with it. We’re committed to making sure that as Article 17 [of the directive] evolves [which could make SoundCloud liable for content uploaded to the platform], that it’s all about the best outcome for the creators and owners of the copyrights.

Is SoundCloud still seeking investors? And have there been any acquisition offers?
We don’t talk about investment specifically. But from a financial performance perspective, we’ve dramatically changed the bottom line. There has always been interest in the company, but for right now, we’re pretty happy with our path.

This article originally appeared in the Feb. 1, 2020 issue of Billboard.