SoundCloud recently closed a Series D round of funding led by Institutional Venture Partners with the Chernin Group. The Wall Street Journal first reported the news. It has since been confirmed by IVP and SoundCloud. Previous investors also participated in the round, including Kleiner Perkins Caufield & Byers, GGV Capital, Index Ventures and Union Square Ventures.
SoundCloud’s ultimate goal is to become the audio platform of the web, or the YouTube of audio. Just like YouTube, user-generated content remains the startup’s fuel. Every minute, 12 hours of sound and music are uploaded to the platform. For comparison’s sake, YouTube reports 100 hours of content uploaded every minute.
Many up-and-coming electronic music artists use SoundCloud to release mixtapes and share them around the web. Well-known musicians also release singles or live recordings on the platform to share them with their fans on Twitter or Facebook. In other words, SoundCloud is the perfect place to transform a music file into a URL and embeddable music player.
Seeing American VC firms putting a lot of faith in a European startup is a big win for the Berlin startup scene.
Back in October at Disrupt Europe, SoundCloud co-founder and CEO Alexander Ljung said that the company was focused on growth and engagement.
That’s why it simplified its premium offering. “The big thing when we made that change is that we went from four different account levels with a fairly wide range of pricing to two different levels with a smaller range,” Ljung said.
With a free account, you can upload up to 2 hours of music, while the most expensive plan allows you to upload an unlimited amount of music for $12 a month (€9). Subscriptions used to be much more expensive, and an unlimited plan was out of reach for many amateur artists.
Today’s funding news is probably the consequence of this focus on growth. At Disrupt, Ljung said that subscription numbers were “pretty much exactly on our forecast.” Seeing American VC firms putting a lot of faith in a European startup is a big win for the Berlin startup scene.
But SoundCloud still has to find the major hidden, yet reachable, treasure. Most of SoundCloud’s 250 million users turn to SoundCloud to consume music, listen to artist-curated playlists and comment. They aren’t content creators; they carefully curate a music feed by following artists on the platform. For now, they don’t generate a lot of money for the company — the website has never been inundated with ads.
According to Re/code, the company is now trying to sign content deals with major music labels. It would put SoundCloud in the same league as other big music companies.
It’s still unclear whether the company wants to create yet another subscription service like Spotify or Rdio, a music store like the iTunes Store or the Amazon MP3 Store, a radio-like experience like Pandora or iTunes Radio, or something completely different. It’s a crowded market, but signing these deals is an important step for the company.
With music labels on board, the company could get more users, more monetization options and better content to convince advertisers.