Soundcloud has been criticised for not paying artists for every stream it plays, unlike other modern streaming services like Spotify and Deezer.
That might not seem like a big deal when the other platforms pay a fraction of a cent per stream, but when you're a major label artist with a hundred thousand plays, those pennies add up.
If Soundcloud doesn't pay, why do so many artists use it and even choose to pay for it to promote new music anyway? And why is that all about to change?
The answer to the first question is simple: it works anywhere. In fact, we at Ultimate Guitar have to use Soundcloud, because we have a global audience and know that Soundcloud will work in every country, unlike YouTube. Our US readers might not notice any problems with YouTube embeds in our top 10 lists, but over in countries like Germany they just don't work because of the way music licensing works over there. Soundcloud works because there's no money changing hands and therefore no authorities blocking the way to ask for a cut.
Some people think Soundcloud gets plenty right, but fails in some critical respects. One particularly vocal music marketer on this topic is Darren Hemmings. He runs digital marketing campaigns for several high-profile artists and is credited with Alt-J's successful online campaign which helped them win a Mercury music prize for their debut album, but his views are also interesting because he's friends with Soundcloud's London staff and even shared an office with them until last year. (Let's just say his views on this matter are insightful.)
These are Hemmings' observations as laid out in a blog post this week:
- Soundcloud needs to introduce ads. "Theyre growing rapidly, and need to satisfy rightsholders who at some point will make a put-up-or-shut-up demand on them," says Hemmings;
- Soundcloud is is running a risk of being overshadowed by a range of new streaming services. We all know how Spotify works, but 2013 is the year that the streaming scene changes. Google are stepping into the fray, Apple are still rumored to be making deals for a streaming platform, and Trent Reznor's Daisy service with Dr. Dre is making waves before anyone really understands what it's going to do when it eventually launches. Soundcloud's strength is that you don't actually need an account to hear songs on it, which is great for reasons explained above, but it's only a small leap for one of the current or forthcoming platforms to do the same and leave Soundcloud behind;
- Soundcloud needs to demonstrate what the value of a fan on their platform is. There's massive growth in listens and activity on Soundcloud as the Next Big Sound 2012 report demonstrated (below), but while everyday Joe artists are just pleased to see listeners enjoy their tracks, marketers want to convert that audience into more money. One way to do that is earn royalties per stream. Another is to somehow hook those listeners with a means to contact them later. Right now, Soundcloud does neither;
Soundcloud's average monthly plays per artist
- SoundCloud needs to understand what kind of service it is. This is the albatross around its neck. Soundcloud was pretty much the first audio platform on the web 2.0 scene that really took off, and it deserves a lot of credit for that, but times have changed.
"I think Soundcloud has an identity crisis of sorts," says Hemmings. "Soundcloud always presented itself as a social network, but I think the reality is that the social element only really kicked in with the recent relaunch. So exactly what space do they occupy? Right now it feels vague."
As you can tell, Soundcloud has plenty to contend with and improve. But it looks like that's all about to change.
At SXSW this week, Soundcoud introduced a new payment structure, cutting down from four different pro plans to two: Pro for 29 per year ($38) which offers an extra four hours worth of music storage, and Pro Unlimited for 79 ($129) with unlimited uploads (perfect for labels) and a tonne of fancy new features. These features could be set to solve the above concerns, and one of them (if you believe the rumors) will be in-line advertisements, like on YouTube.
If you're not willing to pay, don't worry; there will still be free accounts. Not everyone produces music to upload, so they don't need to buy the extra storage, but by signing in they can still take part and "repost" tracks they love. This contributes to a community feel which brings 180 million people back to the site every month, according to Music Ally.
One lingering issue: if Soundcloud starts playing to the beat of a different drum, the benefits of global access and promotion could be at risk. That won't be an issue for many, but for others it could be just another digital divide between nations which pushes us further apart, which hardly lives to the ideals of the old internet. But then, the old internet meant waiting 40 minutes to download a 2MB MP3 files - and I don't think anyone can say they miss that.