soundcloud
The trend has been clear in recent years: Listeners are less enthralled with new songs. Current music’s share of ear-time has fallen from 27.8% in 2022 to 27.3% in 2023 to 26.7% last year, according to Luminate. In 2024, listening to catalog albums — releases more than 18 months old — increased by 6.5%, more than twice as fast as consumption of current albums.
Much of the music cued up on streaming services is still relatively recent: Luminate found that tracks released in the last five years account for roughly 50% of on-demand streams in the U.S. Even so, SoundCloud users are much more keenly attuned to the newest releases than the average listener — current music has accounted for more than 46% of plays on the platform in each of the last three years, according to SoundCloud’s latest Music Intelligence Report, an annual run-down of listener behavior which the company is making public for the first time.
The document “highlights some of our unique positions in the industry,” says Wyatt Marshall, the company’s director of music intelligence. “An artist might start on SoundCloud before they go somewhere else. [As a result], you get people coming to listen to new music on SoundCloud, because that’s where it exists first.”
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For young listeners, new music discovery is increasingly spread across a variety of short-form video platforms and streaming services; TikTok especially has commanded the conversation in recent years. Still, even “in today’s landscape dominated by TikTok and Instagram, SoundCloud remains a critical launchpad for Gen-Z’s emerging cult favorites,” says Corey Goldglit, manager of A&R at the distribution company Too Lost. “While social media fuels trends, and Spotify fuels hits, SoundCloud continues to be where devoted fans first discover raw, innovative talent like Fakemink, OsamaSon, 1oneam, and Nettspend.”
While SoundCloud is best known for nurturing rappers and electronic producers, it’s adding value in other genres as well: Sean Lewow, co-founder of the label Music Soup, has seen the platform introduce listeners to Waylon Wyatt and Vincent Mason, a pair of rising country artists on his roster. (Music Soup is a joint venture with Interscope Records and Darkroom Records.) Uploads of country and folk music on SoundCloud have risen by more than 50% in the last two years, while streams of these styles rose 15% on SoundCloud in 2024.
This mirrors the growing interest in these genres in the U.S. and around the world. “These scenes are attracting people [on SoundCloud] who have always been into it,” Marshall says, “but also engaging a new group of people who are discovering these sounds.”
Since SoundCloud artists and users can interact with music in ways beyond just clicking “play” and “skip” — commenting on songs, for example, or sending direct messages to peers — the platform has additional data to parse when trying to map scenes. “We look at social interaction amongst artists as an indicator of affinity,” Marshall explains. “Zooming out from that gives a feel for what shapes a scene.”
And for how scenes meld borrow from and build off each other. Historically, it’s been difficult for U.K. hip-hop to acquire fans en masse outside of its home country — even with other English-speaking listeners. The Music Intelligence Report, however, singles out two sets of British acts “that are building their sound around the U.S. underground while adding a unique English twist;” in the process, they are “drawing listeners from England and beyond.”
These two groups — the first includes fakemink, Feng, and GhostInnaFurCoat, while the other counts Rico Ace, kwes e, and TeeboFG as members — enjoyed a 71% uptick in streams in the past two years, according to SoundCloud’s data. “In recent months,” the report continues, “tracks from these artists are increasingly showing engagement spikes indicative of future success.”
The Music Intelligence Report identifies other sounds that SoundCloud believes are poised to become more popular in 2025: Vinahouse, which Marshall describes as a “hyper-speed, really energetic” style of club music that’s popular in Vietnam; Brazilian plugg, the latest mutation of a hip-hop sub-genre that has thrived on SoundCloud for several years; and shoegaze, which has also been enjoying a revival on TikTok.
New rappers continue to see success on the platform as well. The third most-played account created on SoundCloud last year belonged to BabyChiefDoIt, who trailed behind only VonOff1700 and Raq Baby. BabyChiefDoIt signed a deal with Artist Partner Group in August, and Izzy Elefant, the label’s head of streaming, calls the platform an “essential” part of the rapper’s rise.
SoundCloud’s features, especially “real-time comments and direct messaging, create an interactive experience that sets it apart from other streaming services,” Elefant continues. “These tools allow BabyChiefDoIt to engage with listeners directly, receive immediate feedback, and foster a sense of community.”
In a splintered landscape for music discovery, Lewow adds, it’s important to “leave no stone unturned.” SoundCloud “has opened our artists up to an audience that they might not have found otherwise.”
SoundCloud announced the roll out of a number of new AI partnerships on Tuesday (Nov. 19), underscoring its intent to integrate emerging technology into the platform — as long as it is used ethically.
Now, SoundCloud users will have access to six new assistive AI tools, including Tuney, Tuttii, Beatz, TwoShot, Starmony and ACE Studio. The company is also using Audible Magic and Pex to ensure that these new AI integrations are backed up by strong content identification tools that provide rights holders with proper credit and compensation.
These new partners join a list of existing AI integrations — Fadr, Soundful and Voice-Swap — SoundCloud has already worked into its platform. Now, any artist can use these tools and then easily share them to SoundCloud through a built-in “Upload to SoundCloud” option within each tool. Songs uploaded directly to SoundCloud will be automatically tagged to show the tool used (i.e. “Made with Tuney”) and artists can edit their newly uploaded tracks directly from their SoundCloud profile page.
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Additionally, SoundCloud has signed on to AI For Music’s “Principles for Music Creation with AI,” which was founded by Roland and Universal Music Group. Its principles include five points, like “we believe that human-created works must be respected and protected,” and “we believe music is central to humanity.”
SoundCloud Next Pro creators can access exclusive discounts and free trials for its nine partnered tools through SoundCloud for Artists.
“SoundCloud is paving the way for a future where AI unlocks creative potential and makes music creation accessible to millions, while upholding responsible and ethical practices,” said Eliah Seton, CEO of SoundCloud. “We’re proud to be the platform that supports creators at every level, fuels experimentation and empowers fandom.”
Learn more about the partnerships below:
Tuney: SoundCloud users can now use Tuney’s AI-powered tools to reinterpret original songs they have posted to SoundCloud (including private ones) without having to know the complexities of using a digital audio workstation (DAW). Using the new “Upload to SoundCloud” button, users can then share their creations quickly and easily back to the platform. Tuney’s Beat Swap feature is among the tools available to SoundCloud users, which can generate new remixes of a song by using a vocal stem and filling in the rest of the blanks.
In a statement provided to Billboard, Tuney CEO/co-founder Antony Demekhin said of the collaboration: “At a time when the major music companies are fighting tech platforms that illegally train on copyrighted works, we see this integration as paving the path for the ethical application of generative tech where rightsholders, artists and fans all benefit from innovation.”
Tuttii: SoundCloud fans can now use this AI-powered app to remix and mash up songs to share on social media with greater ease than using a DAW.
AlBeatz: SoundCloud users can now generate and customize professional-grade beats to work off of in their own original creations.
TwoShot: Created to help music producers kick start their creativity, TwoShot now offers SoundCloud users its massive sample library of AI generated sounds. The company also offers an AI co-producer tool, called Aiva, who can talk through musical ideas with users and help users search through TwoShot’s library.
Starmony: Tailored for singers and rappers, Starmony will now let SoundCloud users upload a vocal they’ve composed, and then the platform will provide professional-sounding production to fill in the instrumental elements of the song.
ACE Studio: With ACE Studio’s platform, musicians using SoundCloud can create their own AI voice models for use in the studio. For one, musicians can convert a melody, written out in MIDI, and convert it into a realistic sounding voice. This can also allow users to generate AI choirs of voices and edit vocals generated by Suno.
On Thursday (Oct. 17) at the Amsterdam Dance Event, representatives from SoundCloud, along with Dutch producer Mau P, took part in a panel during which SoundCloud revealed that electronic music listeners are the most engaged demographic on the platform, among other insights.
This takeaway is based on data that found that electronic music fans over-index for all music activities on SoundCloud, company representatives said, adding that compared to fans of other genres, electronic music fans are 52% more likely to comment, 104% more likely to share music and 85% more likely to repost.
SoundCloud has long been a key hub for electronic music producers, offering a place where remixes and live sets, which aren’t available on many other DSPs, can live alongside new productions, creating a catalog that’s unique to the platform. The way SoundCloud allows for direct artist-to-fan communication has also helped foster the kind of superfans the general industry has become increasingly interested in finding and cultivating. As Jack Bridges of SoundCloud said during a panel this past April, “A lot more artists and labels go to SoundCloud early… and build records from nothing and by artists messaging their fans directly because we have the tools to do that.”
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The platform is becoming increasingly popular among producers. The company reports that the platform is seeing increased uploads of electronic music, with those uploads projected to rise by approximately 21% in 2024 compared to last year. Plays of electronic music genres on the platform have also grown, by roughly 6% since 2022, with electronic music expected to account for nearly 22% of all plays on the platform this year.
And while electronic music is a truly global genre, some areas naturally over-index, with SoundCloud finding that Vietnam has the third largest electronic listener base. Elsewhere, Central and Northern Europe have the most consistent and engaged SoundCloud electronic listeners, while Belgium, Austria and Germany are among the top countries where electronic music is the platform’s most-streamed genre.
In terms of subgenres, house music gets the most SoundCloud plays, listening time and listeners. Hardcore is second in plays and listening time, while trance is second in the number of listeners and third in plays and listening time. SoundCloud reports that trance is also the fastest-growing genre, with a 24% increase in listening time and an 11% rise in listeners since 2023.
They love artists, they’ve got money to burn, and they’re the music industry’s new obsession: Say hello to superfans.
In January alone, Warner Music Group CEO Robert Kyncl called for “stok[ing] the blue flames of superfans” and additional “direct artist-superfan products and experiences”; Universal Music Group CEO Lucian Grainge highlighted the value of “superfan experiences and products”; and Spotify hinted at future “superfan clubs” in a blog post.
The following month, leaders at Interscope and Live Nation shouted out superfans. That was all before Joon Choi, president of the Korean fan platform Weverse, one-upped everyone by telling Music Business Worldwide that “the potential for growth in the superfan business and economy is limitless.” Stoke those blue flames right, and they’ll never stop burning.
All this runaway enthusiasm about superfans “goes back to that Goldman Sachs article,” says Mike Biggane, a former UMG executive and founder of Big Effect, which is developing technology designed to help smaller artist teams. Last summer, the financial institution posited that superfans — Luminate defines this group as listeners who “engage with artists and their content in five-plus different ways” — could inject more than $4 billion into the music industry by 2030.
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Goldman’s report also noted that the music business struggles “to fully monetize its content.” Nearly everyone listens to music, but the industry’s value pales next to that of gaming, for example. Games “have been more agile in terms of innovating and adopting ways to generate new revenue streams,” says Ben Sumner, managing director at Feel for Music, which helps games and brands with music supervision.
But for labels and streaming services, collecting new revenue from superfans may be easier said than done. “People are trying to find a simple way to mine fandom,” says Mike Pelczynski, one of the architects of SoundCloud’s “fan-powered royalties,” a payout system that aligns streaming revenue more closely with fandom. “It’s good for investors to hear, but it’s not simple. Every platform is different.”
Not only that: “So much of the conversation is about how to extract more out of the superfan, which I think is a big mistake,” says Bernie Cahill, founding partner of Activist Artists Management. “If you take care of them, you will get far more value out of that relationship than you will by selling them another piece of vinyl or a T-shirt.”
Pelczynski believes that “superfans want to be closer to, and most importantly seen by, their favorite artist.” They also clearly gain from their connections with like-minded enthusiasts — working together to orchestrate fundraising campaigns to support the acts they love, for example. Luminate found that superfans are 43% more likely than the average listener to say they “like to participate in the community” that springs up around an act.
These communities are defined by artist-to-fan and fan-to-fan relationships. It’s not immediately clear where labels can squeeze in.
And it’s notable that, historically, labels actually excel at reaching passive fans. A record label is unmatched when it comes to taking a song that’s connecting with audiences in one space and making it so ubiquitous that it becomes inescapable, the kind of thing that casual listeners run into at the gym and the supermarket. “We can reach Fall Out Boy‘s superfans pretty easily,” says Jonathan Daniel, co-founder of Crush Management (FOB, Miley Cyrus, Lorde and others). “When they have a song that raises its hand above the superfans, different opportunities come for them, and that’s where you really need the label — they’re great at taking it really wide.”
What’s more, in an age of artist empowerment, it’s hard to imagine many acts ceding control of their superfan communities to record companies. “Smart artists really curate a direct connection themselves,” Cahill says — they know their diehard followers keep them afloat. (It’s jarring to hear executives say things like “fandom is the future,” as if it wasn’t also the past.)
These days, due to the fact that artists can record, distribute and market themselves all on the cheap, they usually amass a dedicated following before they even sign to a label. This tends to give them a lot of sway in contract negotiations, and as a result, 360 deals — where labels take a share of the money that artists make from touring and merchandise sales, for example — are out of favor with young managers and lawyers, limiting record companies’ ability to cash in on superfans’ passion.
Nonetheless, to the extent that labels can encourage superfans to stream more or buy additional vinyl variants, they stand to gain financially. All the major labels also own merch companies, so if they can stoke demand for t-shirts that are subsequently manufactured by their own outlets, that’s another win. And UMG recently invested in Weverse and NTWRK’s acquisition of Complex, allowing it to benefit indirectly from superfandom.
Warner has another plan altogether: In February, Kyncl said that he’s “assembled a team of incredible technology talent” to construct “an app where artists can connect directly with their superfans.” While he hasn’t shared any additional details on what this will look like, users would presumably only have access to Warner artists on a Warner superfan platform. However, most listeners probably also want to connect with some acts signed elsewhere, to the extent they even know what labels their favorite artists are signed to.
The other hurdle for new superfan apps, or streaming platforms trying to add new superfan features, is all the existing options: The majority of artists already try to interact with their most passionate fans on TikTok, Instagram, Discord, Reddit and more. As a result, “artists’ time is very scarce,” says Roneil Rumburg, co-founder and CEO at Audius, a blockchain-based streaming service which enabled direct payments from fans to artists last year.
If more streamers try rolling out superfan features — SoundCloud, for example, allowed acts to message their top fans last year — then artists’ time will be crunched even further, as each platform will presumably require a different approach to engagement. In fact, Kyncl used exactly this reasoning to justify Warner’s venture into platform building. Artists “don’t want to optimize just for one platform over another,” he said.
“The few companies that are trying to build their own ecosystems, I applaud it,” Pelczynski says. However, “I think it’s going to be very challenging to make something that people will be willing to spend their time on and add to their daily usual behaviors.”
Like labels, the most prominent streaming services have spent a lot of time in the past decade figuring out how to serve music up to passive fans. (Spotify once had a messaging system, but it was discontinued in 2017 due to “very low engagement.”) They have had success using various recommendation methods — editorial playlists, algorithmic playlists — to ensure that people keep listening.
But a new generation of listeners appears less interested in throwing an editorial playlist on in the background. Younger, more engaged fans like to slow down their favorite artist’s track, mash it up, or duet with it, leading to the proliferation of homemade re-works across social media platforms.
“For the first time ever, an artist can put a song out and it might be a fan-created flavor of it that connects,” says Gaurav Sharma, founder of Hook, a platform that helps rightsholders monetize user-generated remixes. “Community is being built around music on social media, and fan remixing is a way to be unique in that expression.” It may be hard for major streaming services to cater to this type of fandom, though, due to rights issues: Labels probably aren’t going to condone unauthorized remixes on prominent music streamers. (This is the problem Hook is trying to solve.)
There has also been speculation around the industry about streaming services charging superfans extra for early access to music, a tactic that calls back to the exclusive album windows of a decade ago. That said, “fans expect a LOT of value to justify a monthly fee, especially with subscription fatigue,” according to a recent (subsequently deleted) tweet from Emily White, a former Spotify and Billboard employee whose “team was exploring artist fan clubs.”
Still, despite all the potential obstacles, “We’re seeing a lot of momentum on the institutional music side to figure this out and do it quickly,” Rumburg says, before adding a note of caution: “When so many hopes and dreams get injected into one word or concept, there’s no way it ever lives up to the hype.”
In the nascent days of 2019, a transformative wave of música mexicana was underfoot. Spearheaded by the rebellious strains of corridos tumbados, pioneered by Natanael Cano, this regional style began to take over the internet, and by the end of that year, the Billboard charts. Amid this burgeoning movement, a poignant counterpart emerged: sad sierreño. As música mexicana evolves, it continues to unfold into new and captivating configurations.
The latest installment of SoundCloud‘s SCENES documentary series, titled SCENES: Música Mexicana and released today (Feb. 7), captures that essence. Presented by Toyota and directed by Elías López-Julián Burgueño, it features Ivan Cornejo, DannyLux, Xavi, and Conexión Divina — some of the artists at the forefront of this new revolution. Each, in their own way, encapsulates the spirit of música mexicana, a scene that has grown exponentially since 2019.
As a Mexican-American journalist from the border who once played in a mariachi band, witnessing and helping document this cultural evolution feels deeply personal. Just as the new regional Mexican movement was emerging, I had started a role leading Latin music curation at SoundCloud. So I happily accepted when the platform invited me to participate and narrate this installment of SCENES.
Ivan Cornejo
Julian Burgueño
Cornejo — who graced the cover of Billboard in January — is the embodiment of this new era taking shape. As a young trailblazer who has infused sierreño music with emo-like lyrics and an electric guitar, he leads an evolving soundscape, heralding a chapter where tradition meets contemporary soul.
DannyLux, whose streams surged sevenfold following his breakout album, Las Dos Caras del Amor (2021), according to SoundCloud, represents the transformative power of sierreño music. Conexión Divina shatters traditional barriers as a pioneering queer female group in the genre, representing a shift towards inclusivity and diversity. Xavi, Billboard’s January Latin Artist on the Rise, whose single “La Diabla” continues to dominate the Hot Latin Songs chart, further showcases the global appeal of regional Mexican music with his own strain of tumbados románticos.
Behind this seismic shift is SoundCloud, a platform where these artists first found their voice and audience. “We’re thrilled to elevate Mexican-American artists who are proud of their culture and are deeply impacting communities worldwide,” says U.S. brand partnerships director at SoundCloud, Andrea Ropp. “This partnership is a testament to SoundCloud and Toyota’s shared vision of empowering artists whose passion for their community and determination to push boundaries are leading them to new heights.”
DannyLux
Julian Burgueño
Echoing this sentiment, Alex Chau, brand media manager at Toyota Motor North America, shares, “The creation of this first Latino-focused docuseries with SoundCloud aligns organically with Toyota’s commitment to supporting emerging artists and championing music discovery. These artists are taking the genre to new heights, elevating Latino culture and their community through their sounds.”
“Entire scenes and genres of music have been birthed on our platform, and tastemakers within the industry continue to look to SoundCloud to identify what’s next in music,” adds SoundCloud’s CEO, Eliah Seton. “The regional Mexican music scene is another case study on why tomorrow’s mainstream music trends are emerging first on SoundCloud. We’ve been following RMX (regional Mexican) for years and we’re thrilled to continue propelling the artists and scene into the limelight.”
Conexión Divina
Julian Burgueño
Whether a lifelong fan of música mexicana or newly curious, there’s something profoundly moving in witnessing the growth of a genre that’s as dynamic as the people it represents. The artists’ stories, as showcased in the docuseries, testify the power of passion, community, and innovation.
As Billboard has been reporting, regional Mexican music isn’t having a moment, it’s been a movement.
Watch the full documentary above.
Past SCENES include SoCal Soul, plugg, PC Music, East African Underground and more.
Xavi
Julian Burgueño
A year into SoundCloud’s fan-powered royalties, a departure from the traditional “pro rata” method of calculating streaming royalties, artists have a better understanding of their fan bases and a better chance to monetize their listeners, according to a new report by author, podcaster and economics professor Will Page.
Fan-powered royalties — known more broadly as user-centric royalties — is a method for calculating streaming payouts to independent artists based on individual fans’ listening on SoundCloud. The traditional, pro-rata model divvies up a large revenue pool based on a track’s total number of plays. In that scenario, an up-and-coming artist shares the same royalty pool as the biggest superstar.
User-centric royalties turn a big pool into smaller silos by splitting a listener’s subscription or advertising revenue based on only the tracks they streamed. If a listener streams only independent artists, most or all of the user’s subscription or advertising revenue will go to those artists. Since SoundCloud first announced fan-powered royalties in 2021, Warner Music Group and Merlin have agreed to use the calculation approach for their artists.
SoundCloud singles out an artist’s biggest fans and gives artists the tools to engage with those supporters through person-to-person messaging. With the help of tools that help artists engage directly with their fans on the SoundCloud platform, a small number of what SoundCloud calls “true fans” will provide an “outsize” share of an artist’s royalties. (Page did not define “true fan” or explain the threshold that separates them from less passionate ones.) The combination of the engagement tools and the fan-powered royalties “make this true fan game the most desirable to play,” wrote Page.
The promise of fan-powered royalties is a more sustainable business model for up-and-coming and working-class musicians. For SoundCloud, a well-known springboard for young musicians’ entry into the big leagues, a model that benefits independent artists over major-label superstars would help cement that platform’s credentials in the creator community.
So, Page offered three case studies that examined artists in different stages of their careers. In 2022, Rapper Lil Uzi Vert opted into fan-powered royalties and gave SoundCloud an exclusive on the track “Space Cadet” from his Red & White EP. As a result, according to Page, “more of Uzi’s listeners became true fans, and those true fans made up an even greater proportion of the overall revenue.” With fan-powered royalties and insights from the platform, true fans accounted for 6.5% of the rapper’s audience in July 2022, up from 5.2% in the previous month, as well as 71.8% of his revenue, up from 54.6%. The audience he gained was engaged: 6% of them were true fans, 69% were classified as engaged and only 9% were passive listeners.
To show that fan-powered royalties can help a mid-tier, independent artist, Page offers the example of Kelow LaTesha, a rapper with about 14,000 SoundCloud followers. LaTesha used fan-powered royalties to reach more listeners. True fans’ share of her revenue jumped to 45.7% in July 2022 from 32.2% in June 2022. The number of true fans increased, but because she gained a greater share of passive listeners, LaTesha’s true fans accounted for 1.4% of her listeners, down from 1.7%.
The do-it-yourself case study, focusing on EDM producer/DJ ShortRound, improved both his true fans and his revenue from those fans. From June to July 2022, true fans’ share of DJ ShortRound’s SoundCloud audience climbed from 3% to 4.4% and their share of his revenue jumped from 77.7% to 82%.
SoundCloud’s adoption of fan-powered royalties pre-dated a larger effort to make streaming more financially viable for labels and artists. Universal Music Group partnered with streaming service Deezer in 2023 to improve payouts to professional musicians while reducing payouts to background noise and other types of audio content that arguably provide less value to listeners. In Europe, politicians are calling for “fairer models of streaming revenue allocation” for artists.
SoundCloud’s approach might not be the best approach for all streaming platforms, but the handful of case studies is evidence that the approach works for SoundCloud. The combination of fan-powered royalties and creator tools “opens a new path to prosperity that the entire music industry should understand,” wrote Page.
SoundCloud has been eyeing a sale — and actively pursuing initiatives internally “that would increase the valuation of the company” — since the second half of 2022, according to two former employees who spoke to Billboard on the condition of anonymity. Meanwhile, COO and CFO Drew Wilson is preparing to leave the company after nearly three years in the role, according to a staff memo obtained by Billboard.
Sky News reported on Sunday that SoundCloud was planning to pursue a sale in 2024. This has been in the works “for some time,” one former employee tells Billboard. “A lot of decision making has been based on this.”
SoundCloud announced it was slashing 8% of its workforce last May — less than a year after a 20% cut — to achieve “profitability this year,” as CEO Eliah Seton wrote in an email to staff at the time. “The ambition to reach profitability was not just for the obvious reason of being profitable,” the former employee continues. “The bigger need was for this, to sell the company. The stakeholders have major investments; it’s time.” (SoundCloud previously secured a $170 million investment led by The Raine Group and Temasek in 2017, and an additional $75 million investment from SiriusXM in February 2020.)
A rep for SoundCloud declined to comment. The Raine Group also declined to comment.
SoundCloud leadership had previously tossed around the idea — a best case scenario — of reaching a $2.5 billion valuation for the company, sources said. (The company likes to aim big: In internal meetings, executives also expressed a hope that one of the artists SoundCloud signed to deals in 2022 would have a major chart hit, one of the employees said; this has not happened.)
The more commonly cited valuation goal, the sources say, was around $1 billion. “There’s a billion-dollar-plus opportunity in front of us,” Tracy Chan, who joined SoundCloud as senior vp of creator in 2022, said at an all-hands meeting that year. One of SoundCloud’s former employees said most of the interest in the company came from private equity firms, not music companies.
For comparison’s sake, when Square acquired TIDAL in 2021, the streaming service was valued at around $375 million. Though SoundCloud is not just a streaming service — it also provides tools to creators to help them distribute, market, and monetize music. Creator tools and services brought in more than $26 million for the platform in the first quarter of 2023, according to screenshots from an all-hands meeting shared with Billboard, nearly as much as subscriptions ($29.9 million).
Those screenshots indicate that SoundCloud had a gross profit of around $22 million in the first quarter of the year. But it spent around $4 million on marketing and another $23 million on staffing and general and administrative expenses, leaving it around $5 million short of breaking even.
In May 2023, SoundCloud aimed to reduce that headcount cost through a second round of cuts. (Profitability has been a goal since 2022, if not before: “Investors are looking for companies that are a little more stable right now,” former CEO Michael Weissman told staff during an all-hands meeting that followed the first round of layoffs in 2022. “Investors are looking for companies that are very profitable.”) The company said it finally reached profitability in December.
“Now that we have achieved profitability and are making progress on our strategic plan, we have nothing but opportunity in front of us,” Seton wrote in an email to staff on Monday (Jan. 8) that was obtained by Billboard. “As we have mentioned in previous All Hands [meetings] and AMAs, we will explore a range of options for our capital structure, but there is nothing to report right now, nor will there be any time soon.”
SoundCloud and veteran music executive Sickamore have partnered to launch IIIXL STUDIO, a Brooklyn-based enterprise devoted to signing and developing New York City artists, it was announced today (Nov. 1). The union between SoundCloud and Sickamore (born Randall Medford) will join the streaming company’s proprietary data and the executive’s eye for talent to scour through […]
During his tenure at Google in the early 2000s, Shuman Ghosemajumder‘s official title was global head of product, trust and safety. But he also acquired a snazzier moniker, “click fraud czar,” thanks to his efforts to combat bad actors who try to fake online activity to inflate advertising payouts.
“It was very surprising to us, almost 20 years ago, when we saw organized crime getting involved with online fraud,” Ghosemajumder says. “Ever since then, I’m never surprised: The idea of cybercrime or online fraud coming from an individual hacker sitting in their bedroom hasn’t been the case for basically 30 years.”
Criminal interest in a different type of click fraud drew the attention of the music industry this week, when the Swedish paper Svenska Dagbladet published a piece alleging that the country’s gangs use streaming manipulation as a way to launder money earned via illicit activities. “Spotify has become an ATM for them,” an anonymous police investigator told the paper.
“That article appears to point to a really kind of ingenious way of laundering money,” says James Trusty, a former federal prosecutor who worked on cases involving both computer fraud and money laundering. “It seems to me to be a fairly invisible process right now, and that poses serious challenges to law enforcement.”
“It’s the usual chase,” he adds. “The robbers come up with something new, and the cops eventually catch up.”
In a statement to Svenska Dagbladet, a rep for Spotify told the paper that “manipulated streams are a challenge for the entire industry,” one that the platform “is working hard to combat” via “market leading” technology. On top of that, the rep said Spotify has discovered no evidence that it is being used as a money laundering tool.
If additional criminal activity is discovered on streaming platforms, could that bring new pressure to the music industry to address streaming fraud — something many believe is long overdue?
The article arrives at a time when executives from around the music industry are calling for better monitoring of the streaming ecosystem. “As an industry, we need to do more to harden the defenses of platforms and deter bad actors from using music streaming for criminal purposes,” Beatdapp co-CEOs Morgan Hayduk and Andrew Batey said in a statement. (Beatdapp makes fraud detection technology.)
Svenska Dagbladet‘s report is hardly the first time connections have been drawn between criminals and the music business. Industry history books are sprinkled with gangsters, especially in the earlier decades before it consolidated and became increasingly corporate. In one of the most infamous episodes, the longstanding practice of paying for airplay drew government scrutiny after a 1986 NBC report linked prominent radio promoters with members of the mafia.
But the resulting investigation ended up having little impact and ultimately fizzled out. In the book Hit Men, which catalogs this period, Fredric Dannen wrote that the lesson for the record business was that “the government is incapable of sending any major music industry figure to jail.” Paying for airplay continued unchecked for more than a decade.
The practice of paying for artificial streams has only recently drawn public criticism in the U.S. music industry. Streaming manipulation has the potential to distort market share calculations and steer money away from the hardworking artists who are not gaming the system. Both Universal Music Group CEO Lucian Grainge and Sony Music CEO Rob Stringer have expressed concern about fraud in calls with financial analysts this year.
“Once someone like Lucian Grainge makes a statement about it, it’s necessarily going to get more prominence,” says one streaming service executive who agreed to speak about manipulation on the condition of anonymity. “That’s not to say we weren’t dealing with it behind the scenes before Lucian was making statements. But now there is broader recognition of the scope of the problem and the impact that it has on revenues and royalties that should be, but have not been, paid through to legitimate artists.”
Potential connections between streaming manipulation and criminal elements were raised last year at a pair of music industry panels, first at South by Southwest and then at the Music Biz conference. Michael Pelczynski, who was then SoundCloud’s vp of strategy, participated in both discussions. “We were able to see signs of such activity” by collaborating with Pandora/SiriusXM and the cybersecurity company HUMAN, he says. “The benefit of creating a coalition with a third party was they could puzzle together certain patterns that we as individual platforms could not.”
Streamers try to work backwards from anomalies in the data, trawling for “potential bad actor networks,” as Pelczynski puts it, and trying to prevent them from “migrat[ing] from platform to platform.” Svenska Dagbladet took a different approach, speaking to several criminals who claimed to have direct knowledge of the laundering scheme.
The paper reported that Swedish gangs take criminal profits, convert them into cryptocurrency, use that to buy fake streams for artists they’re connected to, and then collect the royalties. They lose some money in the process by paying for fake streams, but the royalties they extract from the music industry are now “clean” — they can’t lead back to anything gang-related.
“There is always a cost in money laundering,” Trusty explains. But even if it’s a really high transaction cost, it still puts you in a position where you have untraceable, usable profit. And so the key for any real money laundering operation is volume. The article seems to be pointing out that this is something that’s kind of an institutional mechanism for these gangs.”
Trusty was not surprised to hear about the results of Svenska Dagbladet‘s reporting. “Anytime you have technological developments, somebody’s going to figure out a way to take advantage of those in a bad way,” he continues. “It’s eventually in the industry’s interest to lean forward and figure out how to work with law enforcement to close this gap that’s being exploited.”
SoundCloud has promoted two staff members — Tracy Chan to chief content officer and Ama Walton to senior vp of music licensing/deputy general counsel — and hired Devi Mahadevia, who joins the company as senior vp of strategy following a stint at Meta, the company tells Billboard. “Tracy is one of the foremost innovators at […]