SoundCloud's Latest Financial Report Reveals "Material Uncertainties"
It remains to be seen if the Universal partnership and $77m in investment will be enough to keep the streaming service in business.
Alexander Ljung, SoundCloud's CEO. Photo courtesy of SoundCloud
SoundCloud, the music streaming service with 175 million monthly listeners, needs to resolve its ongoing licensing issues and successfully launch a subscription service this year if the company is to stay in business, according to the company's latest financial statements.
In the 2014 accounting report filed this week with Companies House, the UK's registrar of companies, the Berlin-based startup's directors stated: "There are material uncertainties facing the business." SoundCloud, which was founded in 2007 by Alexander Ljung and Eric Wahlforss, further reported that in 2014, it made a loss of $44 million (€39 million).
This 2014 financial report is the most current publicly available financial data for the company. Earlier this month, SoundCloud announced an agreement with Universal Music Group that will give SoundCloud access to the major's catalog, allowing those artists to make money from advertising when their tracks are played. The deal was a major step towards finding ways to monetize its 18 million users; it also goes some of the way in resolving the ongoing copyright fiasco the company has been embroiled in.
In the 2014 accounting report, SoundCloud's auditor, accounting giant KMPG, highlighted three key areas of concern for the company: the successful negotiation of licensing agreements with music labels, the successful launch of a user subscription service, and securing additional funding.
KMPG said in the report these conditions on the company's ability to succeed "indicate the existence of a material uncertainty which may cast doubt on the company's ability to continue as a going concern."
In a statement emailed to THUMP, a SoundCloud spokesperson said the financials for 2014 reflect those of a company in a strong growth stage. They pointed to the $77 million the company has since raised in funding in 2015 as evidence of investor confidence in the firm. "We're focussing on enabling creators to get paid for their creativity, and on building a financially sustainable platform that our community can enjoy for years to come," the spokesperson said.