As SoundCloud is amidst focused efforts to build a profitable business from its 175 million users a month, the popular online music streaming and sharing platform has posted a loss almost twice that of its revenues in the past year.
According to recent annual filings for 2013, the Berlin-based company posted €11.2 million ($14.1 million) in revenues for 2013 — a 40 percent increase from 2012’s €8 million. But that increase is dwarfed by the business’ loss of €23.1 million ($29.2 million) in 2013 that’s more than double the €12.4 million in 2012.
“We are in a phase of growing SoundCloud into the market-leading platform for listening to, creating and sharing sound,” as TechCrunch reports the company notes in the filing. “This has necessitated investment in technology, headcount and marketing. Our overhead base has increased faster than our revenues.”
The news comes days after the Financial Times reported SoundCloud had hit an impasse with the three major labels over negotiations to license their music, stating they were holding out for much better terms. Thee dealings are more complicated than running advertisements alongside streaming songs as on Spotify or Pandora, since SoundCloud runs off largely user-generated music that often has not had rights cleared in advance.
As SoundCloud’s annual report points out, the market for music streaming services is looking highly competitive today. That makes another hurdle as the company works to get its monetization efforts off the ground, as well was the necessity for strategic focus as they continue to move forward.
The report says, “Typical internet users use about four to five different music and audio services during a month. The market is heavily contested by strong incumbents such as YouTube, Apple and Amazon as well as new more focused players. While the group does not expect the market to be a winner takes all opportunity, there are economies of scale and technology developments that need to be monitored closely.”