How Soundcloud Could Dominate Music Streaming

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[dropcap type=”10″ style=”width:200px;”]O[/dropcap]ut of all the streaming platforms available: Spotify, Rdio, Deezer, Youtube Music Key, Beats, and Tidal; there’s one I have great expectations of and anticipation for, Soundcloud!

Soundcloud has announced plans to transform into a streaming platform sometime in 2015 which is this year, YAY! The reason I’m so high on Soundcloud is its effectiveness as a tool for artists to showcase and build interest in their work.

Streaming platforms like Spotify, Rdio, Tidal, etc. allow for artists to be paid for streams of their music but aren’t effective tools for artists to use to generate streams. Spotify requires users to sign in or register to gain access. If a user is on a mobile device they’re restricted from on-demand streaming altogether. On Rdio, Deezer, Beats, and Tidal users need a paid subscription in order to gain access. All this means that an artist already has to have a level of demand and interest where a user will be willing to go through a few barriers to gain access. They’re platforms artists can use to capitalize off of their success not become successful, unless their song finds its way into a Sean Parker playlist – I’m looking at you Lord!

With Soundcloud there are no restrictions. If I post a song to my Facebook page my friends can listen to that song in their Facebook News Feed. If I post a song to Twitter, my followers can stream that song within their Twitter Timeline. If a blog embeds a Soundcloud widget for my song on their site, their viewers can stream that song on their site. Soundcloud as a streaming platform that pays artists for the streams they receive is something that interest me very much because it can give me the ability to independently generate streams and by default, revenue.

Soundcloud Ads

From my first encounter with a Soundcloud advertisement I can see they’re following the monetization strategy of Youtube. Ads run before users are allowed to stream a song but the users can skip the ads after a few seconds. The ads will run on the Soundcloud site as well as within Soundcloud audio widgets embedded around the web.

Youtube monetizes every video stream and splits the ad revenue with the artist 45% / 55% in the artist’s favor. Soundcloud could do the same. Where both services differ from Spotify is that Spotify runs audio ads about every 3 song streams and the restrictions limit the amount of users that stream which limits their ad revenue. Spotify has 60 million users of it’s free ad-supported model while Soundcloud has 175 million, nearly triple the amount of users.

Here’s a full range of how Soundcloud plans to implement ads:

Youtube is native to video. Posting a Youtube video requires editing software and a certain level of skill. All an artist has to do on Soundcloud is upload their song. After doing so they’ll potentially be able to profit from every single stream; be it from a blog with an embedded Soundcloud widget, a link posted to Facebook or Twitter, or an audio player hosted on their band site. It could give artists the ability to profit from user-generated content like remixes and such through a content ID program similar to Youtube’s. Giving users the option of subscribing to stream ad free just adds to the pot and results in artists making more money.

Soundcloud has a community of users collaborating and communicating that are consistently present within the platform. It’s everything Myspace could have been but better. Myspace didn’t provide artists with a simple way to maintain a presence with their fans like Twitter and Facebook does with their News Feeds. The Soundcloud Music Stream is essentially a News Feed like Twitter and Facebook’s but exclusively for audio files. All you see in your feed as a user is a list of songs recently posted and re-posted by artists and friends you follow. The feed is organized by recency where the most recent post appears first in the stream.

Soundcloud Stream

The Soundcloud music stream gives every artist a shot. If a user cares enough about a particular artist to follow them on the platform, that artist doesn’t need a bunch of other fans and streams to maintain a presence with that user. This is in stark contrast to Spotify and Rdio that buries music that doesn’t belong to big name artists. There are 4 million songs on Spotify that have never been streamed, like, not even once. The reason for this is that Spotify does nothing to introduce its users to music that fails to first independently achieve success on the platform, which is pretty much consistent with the way all the current streaming platforms work.

Soundcloud benefits artists far beyond streaming revenue and exposure by providing access to advanced metrics. Soundcloud stats tell artists:

What songs are being streamed and how often
Where those songs are being streamed – Apps, websites, etc.
Song traffic sources – Apps, websites, Soundcloud pages, search strings
Who’s streaming
The location of the users streaming your music – Country, State, City

Watch the video  – Inside Soundcloud Pro

Soundcloud will tell me how users are discovering my music, how much they love a particular song, and where they’re located. I’m allowed to see who the users are that stream my music. I know a user named Jose streamed my song The Sorrow 31 times so far this year. If I wanted to I could contact Jose and surprise him with a free t-shirt or something for being a top listener.

On Soundcloud artists have a level of control that no other audio streaming platform allows. As an artist on Soundcloud I control my profile picture, my page banner, my links, my bio,etc. I upload my music to Soundcloud directly & the music is posted as soon as it finishes uploading. This is important because if I made a song about Lebron James returning to Cleveland I would want to release that song while the topic was dominating the news cycle. Most of the traffic to the song is going to come during that time. Waiting days to weeks for a song to get into a streaming platform allows me to profit from streams of a song people no longer have interest in and won’t stream.

Promoted Sounds

Soundcloud Promoted Sounds

Soundcloud has “promoted sounds” where artists can pay to have their music forced into the timelines of users they target. Promoted Sounds function like “boosts” on Facebook. Facebook boosts charge artists about $5 per boost to reach about a few thousand users. Soundcloud could adopt that system or run a system similar to Youtube where they charge per play. Either way it would provide artists with a means of exposing their music to more listeners in a cost-effective way. Spotify, in comparison, requires that artists spend a minimum of $5000 for a month-long campaign. It also charges artists 10% of their streaming revenue for targeting their ad and adds an extra 10% for every layer of targeting. For instance, targeting by age +10%, targeting by location +10%, targeting by gender +10%, etc. With those three targeting layers an artist would pay $5000 plus 30% of his Spotify royalties.

If Soundcloud can launch a paid subscription model without changing much of the way it now functions, I crown thee King!

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