SoundCloud reported its financials from 2013 and revealed that the site’s losses are growing at a faster rate than its revenue. Revenue increased from 8 million euros in 2012 to 11.2 million euros in 2013, but losses nearly doubled from 12.4 million euros to 23.1 million euros for those years.
“We are in a phase of growing SoundCloud into the market-leading platform for listening to, creating and sharing sound,” the company said in its financial report as a reason for the striking increase in losses. “Our overhead base has increased faster than our revenues.”
The report also demonstrated awareness among the SoundCloud leadership that the landscape for online music resources is crowded. “The market is heavily contested by strong incumbents such as YouTube, Apple, and Amazon as well as new, more focused players,” it said. “While SoundCloud is uniquely positioned in this field through its large catalogue of sound as well as through its diverse user base, the future is uncertain and changing trends and business models may result in even stronger competition going forward.”
That uncertainty from 2013 does not appear to have waned in 2014. SoundCloud has hit road blocks in its negotiations with major labels, and it is moving forward with a new ad-supported model. We’ll be watching closely to see how the platform adjusts to the latest industry challenges.