SoundCloud‘s ongoing financial woes have forced its owners to make a controversial decision. The music streaming platform’s owners have announced that they must lay off 40% of the company’s employees and close its offices in San Fransisco and London.
In a statement posted to the SoundCloud website on Thursday, its co-founder, Alex Ljung, shared that the company had more than doubled its revenue in the past 12 months. “However, we need to ensure our path to long-term, independent success,” he went on. “And in order to do this, it requires cost cutting, continued growth of our existing advertising and subscription revenue streams, and a relentless focus on our unique competitive advantage — artists and creators.”
Of SoundCloud’s 420 employees, 247 will remain with the company. Its offices in Berlin and New York will remain open, and Ljung made no remarks in his statement suggesting that the layoffs would affect user experience.
Despite its prominent role in the explosion of electronic music over the past decade, SoundCloud’s pursuit of financial solvency has shown little promise. In 2015 a filing at Companies House in the UK reported that the streaming service’s losses had increased by 30.9% from the year prior to $52 million, where its revenue had only grown by 21.6% to $22 million.
Even Spotify, widely considered the leader in music streaming, hasn’t broken even as of yet. Merger negotiations between the two platforms even fell through last year, and it later came to light that from 2014-2016 Spotify’s net losses had climbed 64% to $340 million.
Neither Alex Ljung nor any other spokespeople on behalf of SoundCloud have disclosed a timeline for the layoffs as of this writing.
Source: The Fader