The continuing saga of Soundcloud’s financial trouble continued today with the announcement that the company has secured $170 million from investors. According to Redcode, the terms of the new round of investment will see current CEO Alex Ljung step down as former Vimeo CEO Kerry Trainor will take over his duties.
The music streaming service has had a rough year as they had to lay off over 40% of their staff and up until this last bout of rescue investing, the company was quickly running out of funds and appeared to be on its last legs. While Soundcloud had become one of the early leaders in the music streaming arena, the company struggled in recent years to keep up with the runway success of services such as Spotify, leaving it in danger of collapsing entirely.
While Soundcloud initially became a go-to destination for DJ’s and electronic artists to post their new mixes, the introduction of the paid streaming platform, Soundcloud Go was a failure and began the company’s downward trajectory after its rollout last year. What initially made the platform so appealing to underground artists was the fact that mixtapes could be uploaded without fear of being flagged for copyright infringement, as many mixes and mixtapes pull from samples of other artists. When this attitude changed it began to alienate the core user base. A large chuck of the new investment money will be to pay pack the $70 million line of credit the company took out earlier this year to continue operating.
It remains to be seen if this last ditch effort to save Soundcloud will be successful in restoring the companies footing in the music industry.
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