While SoundCloud scrambles for ways to monetize its huge audience, the major labels are playing a game of wait-and-see to find out whether they can do it before partnering up with the streaming audio giant. Licensing talks between SoundCloud and labels have been slow-going, and Universal Music Group chairman Lucian Grange has explained his company's restraint.
During a panel discussion at the WSJD Live Global Technology Conference on Tuesday, Oct. 28, the Wall Street Journal reports that Grange said there's an "opportunity for SoundCloud to create incredible revenue," but that the two companies would need to hammer out what that business plan would be.
The Berlin-based SoundCloud boasts 350 million monthly users, but in 2013 it lost $29.6 million on revenue of $14.4 million (from hosting fees), according to SoundCloud financial statements. It hopes to be out of its financial hole soon, however. In August the company launched On SoundCloud, a partner program that pays creators for ad-supported streams in the United States.
Immediately following Grainge at the WSJD conference was SoundCloud founder Alexander Ljung, who declined to discuss any potential partnership with UMG. "We won’t have everybody in from day one," Ljung said, regarding label partners. "Our intention is to create something that's valuable for everybody and so valuable that everybody wants to be in. We're not there yet."
On consumers' shift away from buying physical albums or digital downloads and toward streaming services, Grainge said that revenue from subscription services like Spotify is simply not enough to stem the decline of both.
"We're in the experimental phase at the moment," he said. "The last two or three years has been about stopping the decline and creating as many platforms and as many services and opportunities to capture money."