SoundCloud reduced its current global workforce by 8%, which will result in the layoff of approximately 40 people across the company.
It is understood that the majority of layoffs within the company will take place in the United States.
The news was confirmed today (May 23) in an internal memo to staff from the CEO of SoundCloud, Elijah Setonobtained by MBW.
Seton pointed to SoundCloud’s long-standing ambition to become profitable as a factor in the reorganization.
Calling the layoffs “simply the hardest thing we can do in our business,” Seton’s memo continued, “This is a difficult but essential decision to ensure the health of our business and ensure that SoundCloud is profitable this year. In doing so, we are securing the future of the business for the millions of artists who rely on us for their life and self-expression, and the millions of fans who come to SoundCloud for the enjoyment of music.
“Ensuring SoundCloud thrives on our mission to influence culture, be the preeminent home for artists and fans, and lead the future of music is critical to ensuring that SoundCloud thrives.”
SoundCloud’s latest round of layoffs comes nine months after the the company reduced its then-global workforce by about 20% under the then CEO, Michael Weissman.
Sources close to SoundCloud’s investors recently told MBW that the company – whose current shareholders include SiriusXM and Raine Group – is in the preliminary stages of exploring a potential investment event, or even a sale, within the next 12 months.
A company move to accelerate its path to profitability would certainly fit with this idea.
The last major investment event at SoundCloud saw SiriusXM take a minority stake in the company in Q1 2020through a USD $75 million OK.
(Coincidentally, SiriusXM also recently cut 8% of its global workforce in a series of layoffs.)
According to recent press releases, SoundCloud’s service now hosts over 320 million tracks of 40 million artists.
In its last published annual budget results – for the calendar year 2021 (two years ago) – SoundCloud, headquartered in Germany, published €230.7 million ($273 million) In annual incomeat the top 19.2% over one year.
The company’s gross profit for the year increased by 33.7% year over year For €81.7 million ($97 million)but its annual operating loss widened to €21.1 million ($25 million) Since €15.4 million in the previous year.
Regarding these expanded losses, SoundCloud explained in its annual tax filing for 2021: “Significant investments were made in our operating infrastructure in 2021, including a replenishment of the management team with new experienced executives from the industries of music and entertainment.
“In addition, marketing spend has been significantly increased (+70%) to drive targeted revenue growth, but [that spend] was slightly below plan.
In December 2022, SoundCloud’s Elijah Seton told MBW, “We really think the next big thing for the music industry is fandom. Today’s music industry doesn’t work for most artists; streaming alone is not enough [financially] for most artists.
“Optimizing and marketing the fandom is going to be very important in unlocking a music industry that do work for most artists.
SoundCloud’s recent moves have seen the company double down on this strategy.
Earlier this month, SoundCloud announced a new agreement with Merlin which would allow members of the latter organization to participate in SoundCloud’s Fan-Powered Royalties (FPR) model.
FPR, an example of a “user-centric” royalty model, allocates a share of each listener’s subscription and advertising revenue only to the artists/tracks they individually listen to.
Members of Merlin including have fun, Five MusicMedia Foundation, IDOL, SecretlySymphonic Distribution and Too Lost all participate in the SoundCloud FPR program.
SoundCloud has previously signed an agreement with Warner Music Group which allows WMG labels and artists to receive royalties from the platform via FPR.
Another SoundCloud fandom-centric announcement also came last month, when the company unveiled its “Fans” tool.
Having already been used in beta by 10,000 artists – including Warner Music Group artists – Fans allows acts to direct message superfans (DMs) with the ability to attach a track to those communications.
The development of Fans has been led by former Twitch and Spotify executive Tracy Channow SVP of the Creator activity of SoundCloud.
In other recent SoundCloud news, MBW discovered last month that Lauren Wirtzer-Seawood, the company’s director of content and marketing since 2021, was leave the company.The music industry around the world