SoundCloud is a music streaming service that millions of people use every year. But compared to competing services like Spotify, it might not seem very popular. So, how does SoundCloud make money?
SoundCloud makes most of its money through advertising and two premium subscription plans. The company also makes a lot of profits from the audio mastering services that it sells access to. Finally, SoundCloud makes money through ticket sales for its unique music-themed events.
Below, you’ll find more details about how SoundCloud works and makes money.
How Does SoundCloud Work?
SoundCloud is a very popular music-sharing and online audio distribution platform used by millions of people worldwide. SoundCloud enables anyone to listen to music that they are interested in without purchasing it directly.
It enables musical artists to upload, promote, and share their music as long as they lawfully own the rights and licenses to the songs. Both the SoundCloud app and website allow consumers to access music.
Its focus on user communication sets SoundCloud apart from other music-streaming platforms. People can leave comments on sections of music tracks, allowing people to critique and compliment artists. Users can also find brand-new music using SoundCloud’s Charts and Featured tools.
SoundCloud also controls the SoundCloud Pulse app, allowing creators to check the statistics on their music, interact with communities on the platform, and share music they enjoy listening to.
Four Ways SoundCloud Makes Money
Now that we know what SoundCloud does, let’s review how it makes money. The primary way SoundCloud makes its money is through advertisements. SoundCloud has ads posted on most user accounts, and they get paid for each ad they show users.
However, SoundCloud also makes money in other ways, including subscription plans, special events, and audio mastering services. Here are some of the different ways in which they make their money.
1. Ads on SoundCloud
People that use SoundCloud for free see advertisements while using the platform. Because free users can’t skip these ads, SoundCloud collects a hefty payment from advertisers wanting maximum exposure.
Businesses must spend at least $25 per promotional campaign, which adds up fast. SoundCloud even works with other companies to make various ad campaigns, ranging from playlists to remixes to music contests!
2. Premium Subscription Plans
While people can use SoundCloud for free, the company makes money through subscriptions.
SoundCloud Go, SoundCloud Go+, and SoundCloud Unlimited are premium plans that SoundCloud consumers pay for monthly based on the features that they want to use. Through SoundCloud Go, users can access many premium features, including offline listening, downloadable music, and no more ads!
The Go+ premium plan gives listeners further benefits and access to SoundCloud Go+ premium tracks. They also don’t have to view or listen to previews. SoundCloud Go costs $5 per month, while SoundCloud Go+ costs $10.
SoundCloud Pro Unlimited is crafted for SoundCloud artists rather than its consumers. SoundCloud Pro Unlimited lets music artists upload unlimited music, get real-time data through SoundCloud’s insights dashboard tool, schedule releases, and earn pro badges!
There are even more unique features for artists who buy this subscription plan for $144 annually. It costs $16 per month, but you will save money if you purchase the plan yearly rather than monthly. The other subscription plan, Repost, costs $2.50 per month. It allows SoundCloud artists to distribute unlimited music tracks to platforms such as Apple Music, Spotify, Instagram, and more!
3. Audio Mastering Services
In the summer of 2020, SoundCloud announced its audio mastering services for interested customers. With this service, users can pay $5 per song to get the music ‘release-ready’ and make it sound more professional.
If a SoundCloud user is subscribed to their SoundCloud Pro Unlimited plan, they can master three tracks per month for free and then pay $4 for every track mastered beyond that. Many artists use this plan because the more music streaming platforms their music is on, the more money they can make.
4. SoundCloud Events
SoundCloud also hosts a series of live, in-person musical events worldwide. These events may feature professional talks from the SoundCloud creator forum or dedicated music concerts showcasing promising artists. All the tickets sold for these events and the profits from merchandise, food, and other sellable items help SoundCloud make money.
SoundCloud Funding Sources
In the past, SoundCloud has raised hundreds of millions of dollars through multiple funding rounds. They have raised money from funders like SiriusXM to benefit both parties in the music industry strategically. SoundCloud has made an estimated $542.8 million through this type of funding, and its most recent funding round was in 2020.
Funding rounds are investments where a company raises funding to help pay for projects, events, or other company-related expenses.
Various SoundCloud Investors
SoundCloud’s investors include companies like Temasek, Twitter Ventures, Kleiner Perkins, Index Square Ventures, and Atlantic Labs. There are even more investors besides these that give SoundCloud money in exchange for things like stocks in the company and other services.
The company has 18 investors that help fund the company. Individuals can also choose to invest in the company by exploring their options for buying and selling private company shares. Unfortunately, SoundCloud does not sell shares or stock in the company through the public stock market.
Overall, SoundCloud makes money in multiple ways. Because the company makes so much money outside of subscription payments, it is unlikely that it will close anytime soon, which is good if you use SoundCloud to listen to or release music. The money that the company makes outside of subscriptions also allows them to offer free access to music to many people.