SoundCloud is reportedly edging toward selling stakes in its company to two, as yet unnamed, private equity firms, in order to keep the streaming service up-and-running for the foreseeable future.
The audio distribution platform, which has given many music stars their breakthroughs, has had a rough time over the last few weeks. It all started when it cut 40 per cent of its workforce, and closed its San Francisco and London offices. This was soon followed by reports that the company only had enough money to survive until Q4 2017, despite the cuts. However, this claim was quickly denied by co-founder and CEO Alex Ljung, who even received support from Grammy award-winning musician Chance the Rapper.
The latest development seems to confirm initial reports of SoundCloud’s lack of money. According to Bloomberg, citing people familiar with the matter, the two firms would acquire stakes as part of separate deals but, as a combination, would own a majority of SoundCloud. Talks are said to be in an advanced stage but could still fall through – as its talks with the likes of Spotify and Deezer have in the past.
On a platform that focuses on the independence, freedom and the free content of the artists and musicians, SoundCloud has struggled to monetise through a viable subscription service or advertising model. In 2016, it introduced SoundCloud Go, which provides ad-free access to an expanded music library – including both major and independent record companies – and the ability to save audio offline.