Streaming music service giant SoundCloud is reportedly terminating nearly half of their workforce and closing their offices in two major markets. The company’s CEO, Alexander Ljung, touted the move as a measure to increase profitability.
This startling twist of fate for the company comes amidst rumors of its impending sale, although far below the previously reported $1 billion valuation. Ljung, however, appeared to dismiss this by using the word independent to describe the company’s trajectory post-reduction.
173 employees in total will be made redundant, or 40% of the workforce. Only its original Berlin and New York offices with remain open, with London and San Francisco shutting down for good. Although this can appear negative, San Francisco is a tech haven, while SoundCloud has moved beyond its origins as a startup and has been a major player in the music industry.
Spotify continues to dominate the industry, with its interface with Facebook making it not only popular, but also accessible. Perhaps this explains SoundCloud’s demise, as it continues to hemorrhage users due to a late entry into the paid subscription model which competitor Spotify has mastered, and Tidal has attempted.
In a bid to increase its profits and stave off the downward spiral, 19% equity stake was sold to Sirius XM radio last year. Additionally, the company had to secure a line of credit to meet their financial obligations.
However, it does remain used by artists to post short 30 second previews of their singles, and fans oftentimes upload mixes by their favorite artists. That said, its reign as the medium through which artists gain exposure appears to be over. Streaming may have won the battle against physical media, but some companies haven’t won the war.