After investors voted on emergency funding today, Soundcloud is officially on life support, a $169.5 million investment round that investors hope will keep the service afloat until a buyer can be found to absorb the struggling company
It was previously reported that the social media streaming service only had enough money left to make it through two more months of business, after it had already closed down two offices in San Francisco and London and laid off nearly half of its staff to cut costs.
While Chance The Rapper cryptically tweeted that he had a plan to save Soundcloud, which he subsequently followed up with a possibly tongue-in-cheek tweet that “Soundcloud is here to stay,” clearly the loss of over $50 million in 2015 while launching their ill-fated subscription service, Soundcloud Go, hurt more than even the sunny-spirited Chicago emcee could fix.
According to Techcrunch, CEO Alexander Ljung had refused to allow the company to sell out to larger, more successful entities like Apple and Spotify, which could have “saved” the service, albeit as a minor part of another brand rather than its own independent and unique service. Recode reports that one of the conditions of the new funding deal would be the replacement of Ljung with former Vimeo CEO Kerry Trainor.
Per Billboard, Ljung and SoundCloud co-founder Eric Wahlforss will remain with the company they founded a decade ago. Ljung will serve as chairman of SoundCloud’s board, and Wahlforss as chief product officer.
Techcrunch elaborated on the dire situation Soundcloud has found itself in:
Rather than focus on its unique value proposition of being the “YouTube for Audio” with demos, DJ sets and remixes available nowhere else, Soundcloud chased dreams of grandeur as it tried to evolve into a Spotify competitor. But after taking years to negotiate deals with the major record labels, the extremely late $9.99 Soundcloud Go+ subscription service flopped. Meanwhile, it had burned credibility with core users like DJs by removing their music over dubious copyright claims while trying to suck up to the labels.
Soundcloud lavishly spent money on offices around the world while its CEO galavanted at music festivals like a rock star. Soundcloud recklessly wasted money, hiring people up until the moment it announced they’d be immediately let go as part of the 173 layoffs it announced last month. Now staff morale is in the toilet, the user experience is a mess, the subscription models are unappealing, competitors are growing rapidly and musicians are fleeing to other upload platforms.
That’s why it seems crazy for investors to fund a $170 million Series F to keep a sinking ship afloat a little longer unless Soundcloud is willing to swallow its pride and get acquired for whatever it can get.
It looks like Soundcloud lives to fight another day — at least until Apple or Spotify can be enticed to take on the cost of keeping the service going.