After reaching a landmark licensing deal with Universal Music Group last week, Soundcloud proved to be a strong competitor within the sphere of audio streaming. It was a necessary step to gain licensing deals with the "Big Four" of music labels. After having inked deals with Universal and Warner, only Sony BMG and Sony/ATV remain.
Soundcloud has been on a roller-coaster ride for the past few years as other streaming services continued to gain traction, leaving Soundcloud to revise it's business strategy in order to show monetization and a steady revenue stream. Now, all that trouble seems to be in the rear-view mirror as the company is being heralded as "the Youtube of audio" and might become the music industry's leading streaming service, giving Spotify serious opposition.
Spotify boasts their 75 million active users, but SoundCloud more than doubles that with 175 million monthly listeners.
This proves that Soundcloud and Spotify have very different business models. Spotify actually shells out more than 80 percent of its revenue to those who own the featured content, while people who use SoundCloud are more than happy with sharing their content for free in order to build a fan base.
What sets Soundcloud apart from other audio streaming services is a lot like what differentiates Youtube from competitors likes of Netflix. It's all about the average general user. Soundcloud's platform allows any user to upload content, creating a strong appeal to the general public. If users are now able to listen to all their favorite artists and also upload their own projects, it becomes the complete package for music fans and enthusiasts.
Spotify may very well be in a perpetual state of legal disputes regarding copyright infringement and ownership of streaming revenue, while Soundcloud relentlessly improves it's business model to be able to host all kinds of audio streaming. With all of this in mind, it's possible that Spotify might not have a chair when the music stops.
[via: Tech Crunch]