SoundCloud, the German music streaming service, announced last week that it will cut as many as 173 jobs or 40% of its staff to stay profitable and find a “path to long-term, independent success.”
The notice comes after rumors about the company being acquired by Spotify felt apart and a new round of funding has yet to be completed. But will all of the changes be enough to help it stay about water?
“In the competitive world of music streaming, we’ve spent the last several years growing our business, and more than doubled our revenue in the last 12 months alone,” SoundCloud co-founder and CEO Alex Ljung wrote in a blog post.
SoundCloud has up to 175 million users, but struggles to monetize its massive presence through its pay services like SoundCloud Go+. For the 2015 exercise, the company registered a net loss of 51 million euros and a revenue of only 21.1 million euros. This situation left the company in $70 million of debt with Ares Capital, Kreos Capital, and Davidson Technology.
The streaming service will consolidate its remaining staff in their New York and Berlin offices and it hopes to finish a new round of funding if they not able to find a suitable buyer within Alphabet or other tech giants like Twitter.
“By reducing our costs and continuing our revenue growth, we’re on our path to profitability and in control of SoundCloud’s independent future,” stated Ljung about the reasons for the cuts and closures, but the future of the German company may still depend on a buyer. “We are actively speaking with a variety of potential investors and other strategic partners,” SoundCloud told Variety last year after an $105 million funding round that included $70 million from Twitter.
As it stands now, SoundCloud is burning cash faster than a DJ can spin turntables on a dance floor.
Marco Islas for TechFunnel.com