Music streamer SoundCloud could be in financial trouble. Latest filings by the company indicate large amounts of debt, and deals have been made with big music labels that could further drain the company of cash.
New filings registered with the UK government revealed that the company lost more than $44 million in 2014, even though the company increased its revenue for that year to more than $15 million. The filings have led to much speculation that the company is in dire straits financially and could close up shop imminently.
That speculation appears to be overblown, however. The debt reported is from a period, which ended over a year ago, and more importantly, the company raised $77 million in funding last year. SoundCloud has issued a statement reiterating its commitment to "focusing on enabling creators to get paid for their creativity, and on building a financially sustainable platform that our community can enjoy for years to come."
The company lately inked a deal with Universal Music Group (UMG), which resolved the licensing issues it had with the world's biggest music label, and also has a similar pact with WMG, Warner Music Group. Those deals both reportedly included a percentage stake in SoundCloud for the labels, which means they may now have a vested interest in keeping the company afloat. That doesn't mean they would provide cash to the struggling streamer, but they could potentially give it some leeway on upfront payments which are required as part of both deals while the company determines its next move towards becoming sustainable and profitable.
SoundCloud is still figuring out how to monetize its platform, given that it is currently a completely free service for users, while artists who upload tracks may choose an optional paid subscription package that allows the use of premium features. The company has promised a subscription version of its platform for listeners, but it is unclear how that would work or if users will be willing to pay for something they are accustomed to receiving free of charge.
It appears that the question is less whether SoundCloud is in current financial danger, which doesn't seem to be the case despite its huge losses, as much as whether the company, through subscriptions, advertising or other means of producing revenue, can continue to survive long term.