According to a report from Music Business Worldwide, SoundCloud, the renowned music streaming platform, is gearing up for a sale later this year, with its owners eyeing a hefty price tag exceeding USD 1 billion.
Reliable sources have revealed that two major shareholders, Raine Group and Temasek Holdings, have initiated talks with investment banks to explore the possibility of an auction for the popular platform. This development comes after Raine and Temasek acquired controlling stakes in SoundCloud back nearly seven years ago in August 2017 for USD 170 million, valuing the platform at approximately USD 300 million. Fast forward to February 2020, and SoundCloud secured an additional USD 75 million investment from SiriusXM, resulting in Sirius obtaining a minority stake in the company.
Recent reports also indicate that SoundCloud is on track to achieve its first-ever EBITDA (earnings before interest, taxes, depreciation, and amortization) profitable year, with projected annual revenues of EUR 288 million (USD 310 million) for the fiscal year 2023. This represents a notable 7.5% year-over-year (YoY) increase or 9% YoY at constant currency. Furthermore, SoundCloud anticipates a positive EBITDA of EUR 2 million for 2023, a significant turnaround from the EUR 29 million negative EBITDA reported in 2022.
Under the leadership of CEO Eliah Seton, who assumed the position in March last year, SoundCloud has undergone strategic shifts. Seton, with a wealth of experience from a decade-plus tenure at Warner Music Group (WMG), steered the company through layoffs in May 2023, which affected around 40 employees. Seton justified the decision, stating it was a crucial step towards ensuring the company’s financial health and profitability.
SoundCloud’s business model is now divided into two segments: its subscriptions business, encompassing subscription payments and ad revenue, and its ‘creator’ business, involving fees paid by artists for distribution, tools, and services to market and monetize their music. With a cumulative release of 320 million tracks by over 40 million artists, SoundCloud continues to play a pivotal role in the music industry’s digital landscape.
As the potential sale looms, industry insiders are closely watching for the impact on the future of this influential platform.