A new financial report reveals that music platform SoundCloud lost $54 million (approximately €51 million euros) in 2015 and may "run out of cash" before the end of this year, Music Business Worldwide reports.
In the report, which was filed at Companies House (the UK's database for company information), SoundCloud co-founder Alexander Ljung said that despite signing license deals with major labels and publishers, and launching its new SoundCloud Go subscription service last year, the company is "currently loss making." The report shows that the company made 21.8 percent more revenue in 2015 ($22.4 million, or approx. €21.1 million) compared to 2014 ($18.4 million, or approx. €17.3 million); however, its losses in 2015 totaled $54.3 million (approx. €51.2 million), a 31 percent jump from 2014 ($41.5 million, or €39.1 million).
Ljung also said in the report that the success of SoundCloud Go will determine its financial future, as the service is "based on a conversation of existing users of the platform into subscribers… as well as the acquisition of further subscribers." He continued: "[This] bears financial risks regarding the operating results and cash flows of the group… Whilst the Directors believe that the Group will have sufficient funds to continue to meet its liabilities through December 31, 2017, the risks and uncertainties above may cause the company to run out of cash earlier than that date, and would require the Group to raise additional funds which are not currently planned."
In a statement emailed to THUMP, a representative for SoundCloud said:
"SoundCloud filed its 2015 accounts with Companies House in December, and they are now publicly available on their site as of today. The accounts show that, in 2015, we were heavily focused on putting the necessary measures in place to build out our monetization model, including our consumer subscription service, SoundCloud Go, and roll-out of advertising on the platform. This meant investing in technology, people and marketing, as well as securing complex licensing agreements with key music industry partners. As such, the company remained unprofitable.
"In 2016, we saw solid growth not only for the industry but for SoundCloud too. And we see this trend continuing throughout 2017. To date, we have successfully launched SoundCloud Go, our subscription service, and our ads business in eight markets, including the US, UK, Ireland, France, Australia, New Zealand, Canada and Germany. We are on a very positive path to achieving our aim of enabling all creators to be paid for their work, while also building a financially sustainable platform where our connected community of creators, listeners and curators can continue to thrive."