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COLUMN: Subscription Services Start To Squeeze Out Soundcloud

Way back when legendary songwriter Bob Dylan penned his 1964 classic, “The Times They Are A-Changin’,” there was no way he could have known how over the span of a couple of decades the introduction of the internet, wi-fi, tablet computers and smartphones would not only transform how we function in our day-to-day lives, it would transform the music industry into an ever-evolving digital marketplace, with the use of subscription-based streaming services.

We often find ourselves lost in the technology. Not necessarily forgetting that there is a world outside our lens and screens, but we find ourselves unsuspectingly getting wrapped up in the next big fad. And, like with any fad (i.e. fidget spinners, Pokemon, Hannah Montana), they tend to lose steam the second that something better comes along.

This brings us to our current situation. Earlier this week, a report published by TechCrunch revealed that SoundCloud, an online audio distribution platform that became popular around 2009 – 2012, for its interactive platform and easy accessibility, may not have enough money to stay afloat for very long.

Things aren’t looking so good for the Berlin-based company, having just recently laid off 40 percent of its staff. In response to the TechCrunch story, Soundcloud executives told Variety that they are “fully funded into the fourth quarter [2017FY].”

While we must wait to see what will happen to the once enormously popular online music service… we have started to see a steady spike in subscription-based streaming services, such as, Spotify, Pandora, and Tidal, which have started to make a major impact thanks to better advertising and marketing ploys, like exclusive content releases and TV spots for cars with the services built in.

Yet, the introduction of streaming services has been a tough pill to swallow for those in the industry today, having changed the metric to include stream-only content.

Jay-Z has gone to become the champion of stream-only content. His latest album, 4:44, was released on June 30th as an exclusive for Tidal customers, and in less a week, he had sold more than 1 million units.

Despite being the fastest album in history to receive Platinum certification from the Recording Industry Association of America (RIAA), the outpour of positive feedback, and the many rave reviews, the album did not wind up on the Billboard charts.

According to Billboard, the reason that 4:44 didn’t debut at the top of the charts, was because the streaming service provider, Tidal, would not report the album’s streaming data to Nielsen Music for the first week of July. Instead, it is anticipated that Jay-Z will make his way to the top of the Billboard 200 charts for the week ending July 22.

Based on its new multi-metric consumption policy, the Billboard 200 charts no longer tracks the top albums of the week by sales alone. Neilsen Entertainment announced that it was introducing its new algorithm, back in 2014, to include on-demand streaming and digital track sales to the way we track consumer activity.

Although the metric has been in place for the past three years, no artist had made it to the Billboard 200 chart with a stream-only exclusive, until 2o16, when Chance the Rapper released Coloring Book, which debuted at No. 8 on the charts with 57.3 million streams, the equivalent of 38,000 units sold.

What makes subscription streaming so influential is the same thing that had first enticed artists and musicians to share their music on SoundCloud in the first place. For years, the online music service hosted hours upon hours of audio content for free, before deciding to try and monetize the platform.

In the spring of 2016, SoundCloud announced it was switching to a subscription-based music streaming service called “SoundCloud Go,” that would provide an ad-free experience, offline playback and a variety of licensed hits from major record labels. When it first went online, the premium subscription service was priced at $10 a month, within the ballpark of rival services Tidal and Spotify. By February, the service had expanded to include a reduced subscription plan for only $5 a month.

“SoundCloud’s unique mix of content, much of which can’t be found anywhere else, is an incredibly attractive offering for music lovers who are at the forefront of what’s happening now and driving what’s next in music,” said Chief Revenue Officer Alison Moore in a statement. “SoundCloud Go answers the call from our users who want the ability to take the huge catalog of content found in SoundCloud’s free, ad-supported offering with them anytime, anywhere, without interruptions, at a very affordable price. And at the same time, we’re now giving users who haven’t made the jump into a music subscription plan, a robust, fully on-demand option at an accessible price.”

With a total library that surpasses both Spotify and Apple Music, due to a large volume of user-uploaded content, it seems alarming that a website with such a vast catalog may be on the verge of shutting down its operations, potentially wiping its servers clean of years and years of samples and production work from existence.

But, perhaps it’s simply progressing… like we saw with Napsterand its subsequent merger with Rhapsody, it sometimes takes several trials and tribulations before you get it right. While we hope that SoundCloud will be able to dig itself out of this hole, we’re certain that there will always be something bigger and better that comes along and changes how we listen.

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