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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New Soundcloud seeing massive growth in fan numbers

Late last year Soundcloud finally made their “Next” iteration live for all. Among the various feature improvements was a more Twitter-like following setup, wherein it was made much easier to follow artists on there. Something else I really liked was the Repost function, akin to retweeting, where you could repost someone else’s track or set to your own followers. For labels, this is a godsend: it means you can post a track to the artist’s account, but repost it to your own followers. Similarly global licensees can do the same.

What I’ve really noticed though is just how much Next Soundcloud has led to a surge in follower numbers – and in some cases how drastic those numbers are when compared to other social networks. Don’t believe me? Check out the rate at which SBTRKT gained new fans when the new version of Soundcloud went live (click for larger version of the image – graphs taken from MusicMetric):

Screen Shot 2013-01-10 at 12.17.52

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