Can Soundcloud take back the power?

Streaming service Soundcloud has today announced their decision to adopt a Spotify-esque advertisement program. After 7 years of run time the company is yet to turn a profit and accounts returned in Britain indicate they were subject to $20 million net losses this accounting year.

The opprobrium has already been fierce, and the decision styled as the death knell for its reputation for accessibility, which some would argue has made Soundcloud so popular. For me there is just one initial thought:

Can Soundcloud place itself back in a position of power? 

All sources suggest it is the power of the major labels which has forced the company’s hand into this decision. The heavyweight players have become disgruntled with the amount of attention their content is attracting to the service, for which they are seeing no return.  But this seems a bit rich. Soundcloud was always conceived as a service for the promotion of new music, not a service for streaming established artists. After all the labels have the ‘choice’ whether to upload their material.  

The key change here has come with the whole shift of the ‘streaming’ eco-system. Whereas before a stream of a track might have been seen as an act of ‘promotion,’ in the hope that the proliferation of the track on the internet would lead to physical and digital sales, the goalposts have completely changed and thanks to the surge in popularity of pay-per-play streaming services elsewhere the ‘stream’ itself is actually the valuable product!

The current Soundcloud business model is still anchored in the era of the ‘stream as promotion’ and is only really effective when the balance of power is in Soundcloud's favour. Emerging and middle-tier artists and labels were/are happy to use the service and see no return in exchange for the increase in profile and popularity that usually accompanies uploading a track.

On the basis of it then surely Soundcloud still has the power? The major labels are still choosing to upload their material onto the site which suggests they value the massive user network Soundcloud has developed otherwise why would they bother - there are plenty of other streaming services? Is Soundcloud having its business model dictated to it then (couched in terms of threats concerning copyright and mixes etc.), or does the company itself recognise the necessity of having major labels, and the massive traffic and advertising revenue they bring, on side. It seems a conspiring mix of both.

One thing is for sure this is massive news and a departure point into a completely new business model with consequences that are difficult to predict for the service.

Is there any other option? By definitively tightening up their copyright protection and making a stand against the big money of course. By banning mixes – surely these can be relinquished to Mixcloud with its already established royalty system, and getting on top of any other violating content (this is a topic for another article altogether) Soundcloud could put itself back in a squeaky clean position of power. Soundcloud’s main asset is its massive user base and attention-seeking brand which major labels would have to chose to either take advantage of or miss out on if they no longer had leverage. The fact that Soundcloud hasn’t gone this way  is telling and probably highlights the amount of revenue brought in by the labels in question.

In reality the ad based system, although probably an extremely annoying hindrance, will at least pacify the majors and see a bargain struck which will secure Soundcloud as the natural home for that esoteric Chaka Khan footwork mix which could do with a few more ears. But is it even worth it being there if you have to listen to an advert for toothpaste to reach it!?