SoundCloud chief Michael Weissman has spoken to Music Week about his efforts to rebuild the company since its near collapse five years ago.
Weissman was part of a new team of executives brought in to turn the service around in the summer of 2017 after it secured $169.5 million in funding from global merchant bank The Raine Group and Singapore-headquartered investment company Temasek.
The digital platform had been subject to drastic cost-cutting and widespread layoffs as auditor KPMG cast doubts over the company’s “ability to continue as a going concern”.
“I think what had gone wrong before was growing too fast ahead of the company’s pace of growth," said Weissman, speaking in the new issue of Music Week. "It’s always about balancing where you’re putting your bets and investments today with when you’re going to get a return on those investments. And I think the company may have made a few mistakes on that."
Weissman was elevated to president in 2019 before succeeding his ex-Vimeo colleague Kerry Trainor as CEO at the start of 2021.
Some of the financials needed fixing, but that core culture community and platform was inherently strong
Michael Weissman, SoundCloud
"One of the things that struck me was there were very few companies in technology that had a vibrant feel and community, and SoundCloud was one of those," said Weissman. "If SoundCloud were to go away, music at large would be harmed and it’s rare to say that about other streaming services in the market. The community was vibrant, the fanbase was growing, SoundCloud rap was just hitting its growth curve and those are things that you can’t replicate and you don’t need to fix. Some of the financials needed fixing, but that core culture community and platform was inherently strong.
"What we’ve done over the last four or five years at SoundCloud is hone the business model to what it should be, which is about artists and fans connecting directly. That is the core. Unlike labels who licence music to streaming services, but have no real connection directly to a fan – and streaming services that licence music from labels – we’re trying to bridge that gap between the creative side and the consumer distribution side.”
Available in 190 countries and territories, SoundCloud houses more than 30 million artists and 300m tracks, and became the first to embrace user-centric payments when it launched its Fan-Powered Royalties system in 2021, which defeated stiff competition to clinch the Music Week Award for Music Consumer Innovation earlier this year.
Artists such as Billie Eilish, Post Malone, Lorde, Bad Bunny, Juice Wrld, Marshmello, Sza, Khalid, Lewis Capaldi, Doja Cat and Megan Thee Stallion reserved their first online exposure via the service.
“While some people think of us as a streaming service and some people think of us as a creator, distribution and product set, there are actually multiple things [about our business] that allow an artist to stay with us from their bedroom, to emerging, to becoming a superstar," said Weissman.
“We’re the next generation of what a music company should be. If I said today, ‘How do you build a music company in 2022?’ I’d have connections with fans, a thriving community of emerging talent and the ability to work with those artists at all stages of their career. That’s essentially the ecosystem we’re trying to build.”
I'm definitely keeping my eye on what's happening in Web3, blockchain and crypto
Michael Weissman, SoundCloud
Last year, CFO Drew Wilson told The Wall Street Journal the business was “at the doorsteps of break-even” and anticipated a net profit by 2023. However, it has not all been plain sailing – earlier this month, SoundCloud revealed plans to reduce its global workforce by around 20% due to the “challenging economic climate”.
"We have healthy relationships with rights-holders, labels, publishers, we have really strong relationships with the artist community and we’ve always had great relationships with music fans around the world," said Weissman, prior to the announcement. "Now, obviously, we’re not immune to economic trends, but we’re in a good spot overall.”
Weismann also discussed the ways in which the metaverse could be a game-changer for SoundCloud and the music world in general.
“I’m definitely keeping my eye on what’s happening in Web3, blockchain and crypto," he said. "That market’s had some real challenging months with the drop in Bitcoin and crypto prices, but we’re looking at how those markets evolve.
"When I was growing up and buying CDs or cassettes, I owned those and it was my collection. In streaming, we access music in a different way. Web3 is a way for that ownership feeling to come back into music and I think that’s a powerful thing. Now, whether it changes the royalty model and the way publishing is paid out, maybe – it might be a better version of it. But it’s really about that ability for people to actually have a stake in the artists they’re trying to support.”
Subscribers can click here to read the full interview with SoundCloud CEO Michael Weissman, which appears in the new issue of Music Week.