What SoundCloud can do to win back lost ground from its most important competitor: Instagram.
What is SoundCloud, actually?
Coming out of the MySpace era, SoundCloud was easy to define. Now, in a mobile world with streaming as the default way of music listening, that has changed.
I’ll go into why, as I explain why SoundCloud’s most important competitor is not Spotify, but Instagram. One started as music app, and the other as a photo app, but they’re both more: they’re children of the web 2.0 – the social web – and as such have become important platforms for communities.
If SoundCloud is to thrive, it will have to figure out how to make up for ground lost to Instagram.
“You mean I can comment on specific parts of each track instead of just leaving a comment on a profile?”
If you never had a MySpace profile, you won’t know how mindblowing SoundCloud was when it first arrived. The web was a different place.
Before Facebook, MySpace was the dominant global social medium. The global social web was different: most countries would have their own social landscape. Brazil, for a long time, was connected through Orkut. The Netherlands through Hyves and Cu2. Much of Asia was on Friendster. Yet MySpace was the dominant global player. It didn’t just have profiles, but it also had music. Bands could upload a couple of tracks to their profile (max. 4 or 5 at any time) and fans could feature artists’ tracks on their own profiles to show what music they liked. People would make long lists of bands and artists they were into and then would search, find, and befriend other people based on this. You weren’t necessarily friends with people you know in real life, or at least not exclusively, and it wasn’t common to use your real name.
It was a social network connected by music, and in the transition years between Facebook taking over from MySpace and music streaming really establishing itself, many people in music longed back for the MySpace days. They wondered what “the next MySpace” would be, even as recently as 2011 (I even wrote a piece about it).
SoundCloud filled an important role. It launched quietly and positioned itself as a collaboration tool for artists. It had this cool feature that would let you comment on the waveforms: something that most people hadn’t seen before. Furthermore, your account could hold an unlimited amount of tracks, throttled by an upload limit of 4 tracks per month for free accounts (they later changed it to a max. minutes per account model – which DJs hated).
MySpace would let people customize their profiles with code, so people figured out how to hack their profiles and swap out the MySpace default player for the SoundCloud player (this later became a supported feature, and you can click here to see a 10-year old guide on how it was done).
Due to SoundCloud’s visually distinctive music players, its spread through music communities was visible on MySpace. The fact that it went viral meant it would saturate scene by scene, as more musicians joined the platform.
How SoundCloud changed music
While MySpace was still the main presence for many musicians, communities started to form on SoundCloud. The musicians who’d spend a lot of time on SoundCloud were different: they’d behave more like what is now called a ‘digital native’. To be online a lot wasn’t necessarily normal for artists: remember, most people didn’t have smartphones yet and music listening was done from MP3-players.
Through SoundCloud’s features, there was now a platform specifically for music that was global, included all genres (though mostly electronic at the time – hiphop wasn’t really there yet), had great commenting features, a way to form groups around topics (similar to Last.fm), and a messaging feature.
All of this existed, but now it existed on one platform. And it changed the way people connected around music, the way scenes formed, and it changed music itself.
A recent example of how the digital music landscape has changed music is the so-called “playlist edit“, a streaming era version of the radio edit. The game to keep your tracks on large playlists is to make sure to keep your skip rate low. People skip stuff they don’t know – especially when they just start listening to a playlist, so long intros get skipped until people get to something familiar, or something that sounds familiar. The top of the playlist is where you get the most streams, so economically it makes sense to cut the intro down and jump right into the track.
A development that preceded that is that music started behaving like the image macro memes that were exploding at the time of SoundCloud’s rise (ask your older siblings about icanhascheezburger). While there is much talk about memes and music now, particularly in the context of TikTok’s impact on music, this development is something that has been going on for more than a decade and SoundCloud’s community was at the center of it.
In 2009 Dave Nada slowed down a house track at a party to match with the reggaeton being played there. It sounded amazing. He went home, made an edit, and uploaded it to SoundCloud. And that’s how moombahton was born, a genre now eclipsed by trap and subsequent developments in popular music, but it has provided the underpinnings for hits by people like Diplo, Justin Bieber, Ariana Grande, Skrillex, and many others.
After uploading it to SoundCloud, other producers heard Dave Nada’s remix, and started making their own moombahton edits. Soon they started making originals. Some of the people from this movement grew into ‘EDM’ stars, like Dillon Francis. And perhaps this had been happening before moombahton, but for me it was the first time that I noticed a genre being born within a matter of weeks, if not days.
Why the comparison with memes? Well, they behave similarly: due to music tools becoming more widely available (mostly through pirated music production software) it became easier for people to participate in music creation. Editing an image became easy with computers entering every household, and memes became a language of expression. The same conversation happened through music: someone would upload a musical idea and someone else would run with that idea and apply it to something else according to their vision. “Remix culture” was the phrase then, but now we use the ‘memes’ label for the vast majority of that phenomenon.
As moombahton was growing, electronic music producers started playing around with sounds of trap – a style of hiphop until then, that sounded very different from the Harlem Shake and Turn Down For What-style hits that were to follow.
Community was essential to SoundCloud and then they risked it all
For a long time, SoundCloud struggled with its business model, the licensing fees it had to pay rightsholders (and was getting sued for), and the fact that people were uploading music that wasn’t theirs to the platform.
How that all played out is a story for another time (or hey, right now, since it’s already been written about a lot, just head to your favourite search engine or try Ecosia which is like a greener Google). The result of how that story played out is that SoundCloud suddenly found itself manoeuvring into the typical streaming service domain of business models and service design. It struck deals with the majors, launched ads for the free part of the service, subscriptions for the listener side of the business (with a similar pricing model as Spotify & co), and added labels’ back catalogues to the service.
More music: cool right?
Well. Not really.
SoundCloud was the place for the freshest music. SoundCloud enabled new communities to emerge and connect, and those communities enabled SoundCloud to have the newest in music before it was available anywhere else.
Now, that all got merged into a context which included artists who were dead long before the internet. That’s not why anyone was on SoundCloud.
As music industry analyst Mark Mulligan pointed out at the time:
“Unlike Spotify and Deezer, whose free tiers have long been geared towards driving subscriptions, for Soundcloud this is not a funnel tweak, it is a pivot. It is a complete change in strategy.“
Driven by the expense of the operation, the company focused on selling itself as a catalogue service, essentially competing with Spotify — something it hadn’t really done before. As an on-demand catalogue service it was simply inferior to Spotify’s product that had been developed exactly for that purpose. For its own original purpose, SoundCloud’s product was still superior to Spotify’s product and to a large extent still is.
This part of the story ended up with layoffs and a change of management at SoundCloud. Its founders out. Painful.
It looked like SoundCloud wasn’t going to make it, but after debt funding and new investment, SoundCloud survived, now with a new CEO: Kerry Trainor, who previously led creator-centric video platform Vimeo.
Somehow, he convinced the company’s investors to let SoundCloud pursue a creator-centric strategy again, despite all the sunk cost into a different direction. And that brings us to today’s landscape.
SoundCloud’s most important competitor is Instagram
The defining thing about SoundCloud is not that you can listen to music there. You can listen to music on the radio. What has always defined SoundCloud is its community that pushes boundaries of genres and develops new styles (there’s even a hugely popular, chart-topping genre that carries the company’s name: SoundCloud rap).
SoundCloud is where it pops off, but the community doesn’t really connect there anymore.
Sure, people will leave a comment, maybe send a message, and do a repost, but that’s a very narrow spectrum of interaction among communities of creatives. Where do people share their work-in-progress music? Where do artists share their excitement about releases of other artists in their community? Where do people ask for feedback and create back-and-forths around creative expression? Instagram.
If people need to get in touch with each other, they DM each other through Instagram, too. It’s actually impossible to message people on SoundCloud from your mobile phone (go ahead, try it). More frustratingly, from your mobile device it’s also impossible to read messages people sent you.
Through posts being shared in Instagram stories, people discover new accounts to follow. When you visit a profile, you see which people are already following them — this helps to determine community-membership. Seeing who someone follows and is followed by exists on SoundCloud, but it’s just not as well-done as on Instagram.
Another aspect we often forget to discuss is that music culture is not just music. Music has a visual culture. With more of our time spent discovering and connecting to music online, even pre-corona, music’s context has become more visual than before. I’m not talking about music videos necessarily. I’m talking about shots from the studio, artists’ personal life, artwork, stuff artists are inspired by, videos of digital audio workstation screens, etc.
Music is a visual culture, which is one more reason why music culture & communities congregate on Instagram.
Is Instagram a music platform?
No.
You could make the argument that it is, but in defining Instagram as a SoundCloud competitor, I don’t think Instagram as a music platform is relevant.
The exciting thing for SoundCloud has always been its community. What made SoundCloud successful is that it made its community successful. And while SoundCloud is still the place where these communities post finished tracks and DJ sets, it is no longer the community’s center.
Instagram is the center of important parts of SoundCloud’s community and that is a problem for SoundCloud.
MySpace wasn’t a Facebook and it wasn’t a music platform necessarily: it was a bit of both and in being so it was the center of a community. As Facebook and SoundCloud built compelling new services that did the 2 things MySpace was doing well, communities started shifting and MySpace lost its center.
Now SoundCloud has lost its center. It is doing better than a few years ago, but there is a risk. What does this risk look like?
Let’s look at Bandcamp’s days where they drop their revenue share. The site sees record traffic and record sales on those days. Even for underground genres, where musicians’ fans are probably musicians themselves too, I doubt that SoundCloud is responsible for anything like the traffic Instagram is sending. And that’s fine, because SoundCloud is not necessarily a social media platform – it’s a music platform. The problem is, so is Bandcamp.
SoundCloud is in a good position. It’s part of online music’s infrastructure. As is Bandcamp, and I don’t think the two platforms are competing or are likely to make deliberate choices to end up competing. But SoundCloud doesn’t own its community, and it has a problem when its position as part of music’s default infrastructure is threatened (e.g. by a large streaming service that’s already integrated with Instagram deciding to compete with labels and adopting more creator-centric features).
How can SoundCloud win back its community?
I expect this is the question you may be asking or the question you expect to be answered, but I don’t think it’s the right question to ask. This is about SoundCloud’s place in a cultural landscape. Getting to a certain position in this landscape takes long and is unpredictable. Just consider that the start of SoundCloud’s story is as a tool for music sharing and collaboration. Did they think it would become a cornerstone of global rap and electronic music culture? They could have dreamt it, sure, but they wouldn’t have been able to map out the path by which they’d eventually achieve it.
Everything depends on early adopters
Some services adapt to user expectations by widening their demographic and appealing to a larger number of people (e.g. people that are not digital-savvy, are into music but are happy to just have a radio stream, etc.). In doing so, you often alienate early adopters who will start looking for the next thing. In 2017, SoundCloud was in trouble and Spotify was aggressively trying to increase its market share. I argued that we were witnessing a new “MySpace moment”: an end of one era and a beginning of a next one, as underserved early adopters start moving on and start populating new potential markets for entrepreneurs and investors.
Well, we’re there. It’s now. Accelerated by the global lockdowns in response to COVID-19.
A new landscape is emerging and in order for SoundCloud to retain its position as infrastructure for the early adopters of this generation, then it will have to integrate into that landscape. Just like it did when everyone swapped out their MySpace player for SoundCloud’s.
It will have to integrate not just with incumbents, but also upcoming startups in:
- Music production software (software can mean mobile or desktop apps, as well as browser-based)
- DJ software
- Virtual environments like video games and VR experiences
- Augmented reality experiences
The good news, if you’re cheering for SoundCloud like I am, is that they’re already doing these integrations. I can go to Plug.dj and play SoundCloud tracks for a room of my friends’ virtual avatars, as a DJ I can access SoundCloud’s catalogue from DJ software like Rekordbox, Serato, and Traktor with the Go+ subscription. They’re already integrated with the most popular augmented reality platform, which is Instagram with its filters and effects.
This is just survival strategy though: SoundCloud must stay close to early adopters so it doesn’t risk losing its place as essential infrastructure. The road back to being the community’s center is another question.
As long as SoundCloud can grow its revenues by sustaining itself as infrastructure, it may be a difficult business decision to invest in doing more than that. Doing more than that would take research. Definitions of audiences, so they can decide which ones to focus on and which ones to risk losing. It’s easy to shout what a company should do and make a compelling point for why they would be successful doing that. It’s much harder to execute it, and I speak from experience (on both sides).
A music streaming service as an ecosystem
My attempt to build a modularized music streaming service with low-priced subscriptions ran into all kinds of issues. You think a good funding round buys you time and we were well-funded at $20M, but money burns fast if you’re a streaming service. Ultimately, we needed to get high growth numbers according to industry benchmarks. Those benchmarks were established by other companies doing bundling deals with telcos. None of the local telcos we spoke to were into the concept of an ecosystem of music apps: they wanted a one-size-fits-all app like Spotify or Deezer. For a while we pursued 2 strategies at once: we built the standard app to try to get partnerships, while also working to construct the ecosystem.
Pursuing two strategies wasn’t intentional. It was the result of compromise. We now had two competing visions and efforts in the company, and even if they were mostly compatible, it was impossible to focus on both and be successful both ways. Not at that stage, not at that scale.
With time lost and money spent, I didn’t think the company could reasonably expect to be a large international player that could compete with the likes of Deezer and Spotify (the two major streaming subscription services outside of the US at the time). I didn’t say it publicly at the time, nor to the team, but I told the founders & CEO that I thought Zvooq’s best bet was to be a strong local player. An obstacle to entry and adoption for companies like Spotify and tech giants which inevitably would launch their own music streaming services (Apple was only just launching iTunes in Russia where we were based, and hadn’t acquired Beats Music yet, which became Apple Music). Personally I felt like that was the most likely route for investors to get a return: being acquired as part of a market entry strategy.
I had nothing to prove in building ‘yet another’ streaming service, and while I had fun figuring out how to serve a market where many people’s only personal computer is the cheapest Chinese Android phone money can buy, I decided to bow out. And that’s where the anecdote ends.
There’s a similarity though:
SoundCloud ended up pursuing two strategies too. It wanted to be Spotify and it wanted to be, err… SoundCloud. It ended up being neither and has now spent 2 years rebuilding.
If I were at SoundCloud, exploring how to get back to that center (for some reason), I’d be looking into the AI landscape. It’s going to accelerate things; faster iteration on musical ideas; MORE MEMES. If you thought getting production software onto everyone’s computers and phones changed music a lot (with SoundCloud at the center!), just wait until artificial intelligence-assisted creation really breaks through.
But I’m not at SoundCloud. And as we hit the 3000 word mark, it may seem I know a lot, but I know nothing. There are opportunities to research, but to say what they mean for SoundCloud requires insight into the company’s business, user research, behaviour on the platform, market analysis, etc.
But if I were to start researching this topic, with what I know now, I think SoundCloud’s best chance for moving back into the center is called AI.
Notes
When I say AI in this piece, I’m talking about AI-assisted music creation (or perhaps even AI-generated music). Music recommendation is another popular avenue for AI and something where machine learning has been more successful in attaining mass adoption and satisfaction by end users.
A small disclaimer on early adopters: the people that make up ‘early adopters’ change. The people who were early adopters in 2009 may not be part of that group now. Some of the people who would be part of that group now were 8 years old back then and probably not part of SoundCloud’s target audience. So when you hear this term used in narratives that span potentially multiple product lifecycles, don’t think of it as a static group of people.
Top photo by Attentie Attentie on Unsplash.
Edited while listening to Perc’s DJ set for UNSTREAM (techno).
New to MUSIC x? Subscribe to the free newsletter for regular updates about innovation in music. Thousands of music professionals around the world have gone before you.
Billie says:
Have you checked out BeatSense.com which hit the sweet spot between a mix of a social network with a music streaming service?