In order to survive, SoundCloud continues to borrow money. Surprised? Some of the biggest companies have never made a profit, and it’s not that uncommon.
This week it has been revealed that the streaming service is “running dangerously low” on funds, as pointed out by Digital Music News.
‘’SoundCloud will likely require an ’emergency bridge,’ either from existing investors like Union Square Ventures, or alternatively, a bank, by the end of this year.‘’
‘’Last year, Soundcloud closed an important round with Warner Music Group. The WMG deal involved a percentage stake in SoundCloud of up to 5 percent, according to sources, as well as a publishing pact with Warner/Chappell Music Publishing and consideration for all-important ‘derivative works,’ which refer to samples and snippets of copyrighted works.’’
Sony Music Entertainment and Universal Music Group have yet to finalize deals.
Investors are reluctant to invest more money into Soundcloud until they come to terms with Sony and Universal, who are holding out for a larger cash lump sum. Investors worried that Soundcloud could face legal proceedings if an agreement can’t be made.
Although SoundCloud has recently come under criticism for not paying artists and labels properly, according to an unsigned contract between the platform and the National Music Publishers' Association, SoundCloud is planning to consent to pay 10.5% of its revenue from a paid subscription service which will be launched later this year.