It’s Go time for SoundCloud: $9.99 tier aims to rival Spotify with millions of premium music tracks

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SoundCloud is often billed as the “YouTube for audio” because of its huge trove of user-generated music and spoken-word tracks, uploaded by some 12 million creators and now listened to by some 175 million monthly users globally. But today the Berlin-based startup is (finally) taking the wraps off a new subscription service that could turn that concept on its head — and put it head-to-head in competition with the likes of on-demand streaming services like Spotify, Apple Music and Deezer.

SoundCloud Go, a new subscription tier launching first in the U.S., will give users access to some 125 million tracks including premium licensed content on demand, starting first in the U.S. at $9.99 per month (or $12.99 on the iOS app after Apple’s transaction fee). On top of the existing SoundCloud UGC trove, users get tens of millions of on-demand premium tracks, along with offline listening, and no ads.

Those who choose to stay on SoundCloud’s free tier will still see ads, and will get a very reduced number of new premium content tracks alongside the UGC, Alexander Ljung, SoundCloud’s co-founder and CEO, told me in an interview. For example, an artist keen on promoting a single track from a new album might choose to put that track into the free tier, he explained.

“SoundCloud as people know it today with the free service and artists’ presence is all the same, nothing changes,” he said. “SoundCloud Go is an extension beyond that. Those who choose it get the expanded catalog.” He added, though, that offline listening has been the company’s most-requested feature, so the hope is that this will potentially sweeten the deal anyway.

Ljung wouldn’t tell me just how many of the 125 million tracks are “new” premium content supplied by labels, versus tracks that were already on SoundCloud uploaded by artists themselves or other users. But at a guess, based on SoundCloud previously touting 100 million+ tracks, it’s around 25 million new songs. As a point of comparison, today Spotify says that it has some 30 million tracks on its service.

Ljung also confirmed to me that there will be more paid services getting added in the future, including a tier for creators who are uploading content that mixes in licensed music.

“We’ve gone the long route of aligning with the music industry,” he said of today’s new addition and the new subscription tiers yet to come. “In the future you will start to see more things. We think this will lead to brand new revenue streams in the industry.”

Indeed, today’s Go launch is not SoundCloud’s first subscription service as such: SoundCloud Pro, which is aimed at creators rather than consumers, comes in two tiers of $7 and $15 per month and gives people the ability to upload more than the standard 12 hours of audio, plus analytics and more content controls.

Understanding that there will be a significant crossover of creators and early-adopter listeners, SoundCloud is offering a discount on Go to the most dedicated Pro users: Pro Unlimited ($15/month) subscribers pay $4.99/month for six months of Go.

The launch of Go is a long-time coming: plans for it were first leaked back in July 2015 and then confirmed by co-founder Eric Wahlforss in subsequent interviews. But in the interim, the company has been signing deals with record labels to get the service off the ground — no small feat, it seems, as the most recent (and final) of which was with Sony only earlier this month.

Deals like this were put in place to help SoundCloud repair some of the very bad vibes it had with rightsholders, who pulled music off the platform in the past because it was impossible to collect royalties on tracks when they popped up on SoundCloud.

And SoundCloud also a very late entrant to the streaming race, with those leading in the field having a healthy head start. Spotify, for example, confirmed last week (anticipating today’s news, perhaps?) that it had 30 million paying users of its service, with 75 million overall.

Ljung puts on a confident face when asked about challenges like this.

“The market for music is incredibly dynamic. Things look totally different today from a year ago,” he said, possibly referring to the launch of Apple Music and how that has shaken things up for Pandora and others. “Things change quickly,” he added with a little smile.

He also argues that we’re still in the early stages of what he and others hope/believe will be a mass market for music streaming. “We know we are at the beginning of the boom,” he said. “Streaming is still a tiny part of overall music listeners.”

Still, on a more basic note, SoundCloud has an uphill road ahead to bring itself into the black as a viable business.

The company, with its operational HQ in England, regularly publishes accounts that reveal the extent of the company’s burn rate and other financial measures, albeit on a delayed basis. Most recently, the company’s 2014 accounts showed a loss of more than $44 million on revenues of just under $20 million — collected from advertising and its Pro tiers.

The company has raised just over $123 million since being founded in 2007, and it will have to raise more this year at its current rate. And that is before you consider the spend needed for a new launch and the new demand to pay out royalties under its new deals with the big labels and Merlin.

Unsurprisingly, Ljung refused to comment on fundraising and where the company stands today financially.

SoundCloud has been tipped as an acquisition target for the likes of Twitter in the past, but licensing issues were one reason that Twitter backed off, from what we’ve heard. In that sense, getting all of its ducks in line could help SoundCloud with a plan B exit, while waits to see if its bigger effort plan A — to build its bigger platform into a standalone streaming, UGC, and on-demand premium audio business — takes off.