The History of SoundCloud: From Startup to Industry Staple

It goes without saying that SoundCloud is one of the major and most influential music platforms that revolutionized the music industry. It would be wrong to address it as a music streaming platform, as it is more like an audio distribution platform that allows music artists to share their audio creations and music with global listeners. Since its inception, SoundCloud has been empowering artists with its effective monetization model that works for all kinds of artists, whether a singer, a rapper, or a DJ. While there are many potential competitors in the market like Spotify, Tidal, Deezer, and others, SoundCloud shines bright as not only a preferred platform for the listeners but also for the artists. Let’s find out more about this music platform that inspired the industry and generations of music lovers.

What is the Founding Story of SoundCloud?

SoundCloud was founded by Alexander Ljung and Eric Wahlforss back in 2007, and the official website was finally launched in 2008. Since the inception of the platform, it has quickly become a hub for artists where they can share music and also find other emerging artists to collaborate with. The platform helped to foster the emerging talents and offered maximum exposure for the rising artists who have now become the celebrity artists of the industry, such as Billie Eilish, Lil Uzi Vert, Travis Scott, and many others. Though the company faced some major financial issues, it bounced back in no time! The reason why SoundCloud still stands tall among the competitors is its ethical choices of making it a creator-focused platform that empowers people rather than securing its own profit. And that’s why this platform is thriving powerfully in the modern music ecosystem.

A  Brief History of SoundCloud: Startup to Industry Leader

    • Early Years of Rapid Growth 

The Berlin-based audio platform was launched in 2008 with a simple goal to make it exclusive for musicians and sound designers to collaborate and work together through a digital platform where people from around the globe can join. With simplicity in approach and an empowering goal for the artists, the platform started gaining attention quickly, and many artists found an opportunity to make music, share it, and create a career out of it.

Based in Stockholm, the founders of the platform found a possibility of growth in the industry that focuses on easy audio sharing. Being sound engineers and artists themselves, they could understand the struggles that an independent artist would face who could not sign with a reputable record label. They wanted to keep the process simple so that artist could share their music and the content gets online. The initial focus of uploading and sharing shifted to creating a whole new community of music lovers, and SoundCloud soon became a social media platform for sound. The platform offered many features like uploading large files, sharing privately, and many others, which turned it into a mid-2000s influencer.

SoundCloud played a key role in cultural development, and with the rise of social media, the platform quickly became flooded with users. It became a potential hub for independent artists, and the further growth of the platform was enhanced by its user-friendly interface and focus on audio. The company secured some major funding, and the number of users quickly increased, providing more sustenance to it.

    • Financial Challenges and Shifts 

By 2011, SoundCloud claimed to have more than 10 million registered users, marking its smooth growth within a short span. Although the company grew rapidly in its initial phase, it soon faced a lot of issues as many of the creators started uploading copyrighted material, which led to copyright infringement and licensing issues. The platform faced disputes with the major labels like Universal Music Group, Sony Music, and others. Sony decided to withdraw its music from the platform in 2015. In 2014, Twitter made a bid to acquire the platform as it was facing financial problems, but the bid collapsed due to licensing and valuation differences. A similar situation occurred in 2016, when Spotify tried to do the same. However, SoundCloud stood strong with integrity and never got sold.

Within a couple of years, the platform decided to bring its subscription model, namely SoundCloud Go and Go+, in order to gain more annual revenue, which can be reinvested for its growth, and that helped to reduce the financial issues and improve the structure for monetization for the music artists. They also shifted the structure by offering many advanced services like offline playback, ad-free listening, and access to a licensed music catalog. The platform restructured in 2017 and downsized its workforce by 40%, and even Alex Ljung stepped down as CEO just to manage the financial crisis, but they never stopped.

    • Reinventing Platform with a Focus on Creators

With the era of new leadership, SoundCloud went back to its roots of focusing on a creator-based platform, and the business model took a shift in 2019. The company acquired Repost Network, which is an artist distribution platform. This acquisition helped to distribute music and gain more royalties. The company kept on bringing new models like the "fan-powered royalties" system, which was introduced in 2021. This system pays the artists based on the listening habits of the fans. The traditional pro-rata model was changed to offer more royalties and creative freedom for the small creators and rising artists on the platform.

In 2022, SoundCloud acquired Musiio, which is an AI music curation company that provides advanced discovery features. This is perhaps the most intelligent acquisition in the age of AI, and the platform confirmed the fact that they do not use artist content for generative AI. Currently, SoundCloud is the biggest community-driven platform that is artist-centered and sheds more light on the rising talents in this competitive and crowded streaming market. It still works like a launch pad for the rising artists and helps them pave their way to the glorious music industry, where artists turn into celebrities. SoundCloud has also given birth to many sub-genres, such as the SoundCloud rap genre. This platform is now connecting artists and fans directly.

Some of the Key Milestones of SoundCloud

SoundCloud has been growing in the industry for many years now, and there are many key moments that helped the company pave its journey in the market. Its ability to adapt to the market and bring innovation helps to progress in the dynamic landscape.

    • 2007 – It is the founding year of the platform, when it appeared and revolutionized the market.

    • 2016 – A crucial partnership with Merlin was established in order to help independent music artists with a wide and effective music ecosystem.

    • 2017 – SoundCloud decided to launch its subscription system in order to diversify revenue generation and better pay the artists.

SoundCloud has truly revolutionized the music industry and brought all music lovers and creators together on a single platform. They introduced comments on music, waveform, repost, and many other features that cannot be replicated by other platforms. It still stands strong with its individuality and integrity that have helped the company thrive through all these years. It is safe to say that SoundCloud is going to stay for a century or more with this prolific progress.