SoundCloud needs to make its move – and soon

800x500_white-on-orangeLet’s set out a few facts here. First: SoundCloud is experiencing massive growth, particularly since its “Next” iteration went live for all late last year. Second: with that growth and switch to a Twitter-like “follow” mechanism, artists are seeing huge growth in fan numbers on the platform – in some cases rivalling or exceeding Facebook. Third: SoundCloud pay nothing to rightsholders.

Among my peers, the same question keeps getting asked: “When are SoundCloud going to start paying?”. Make no mistake: people are starting to resent the fact that they’re seeing all these plays and getting no payment per-stream. There’s a Catch-22 here: as the platform grows and delivers more plays for artists, so will the annoyance among rightsholders who are seeing those big numbers with zero payouts.

Here’s some observations as I see it:

1. SoundCloud needs to introduce ads
Right now, SoundCloud is in the same place as the pre-monetisation YouTube. They’re growing rapidly, and need to satisfy rightsholders who at some point will make a put-up-or-shut-up demand on them. Additionally though, their costs must be spiralling on an epic level. An audio platform is not a cheap one to run, being fairly bandwidth-heavy, so logic would dictate that at some point Soundcloud’s investors are going to demand a stronger push to monetise and offset costs. Advertising is inevitable: its the only way the requisite revenues can be generated. Look to YouTube for the precedents on this one.

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