19:43 20 July 2017
SoundCloud, which was founded in 2008 with a total $193 million in funding so far, has announced that it is letting go 173 of its employees – around half of its total staff. The announcement has followed rumour that the company was going to close it business.
However, co-founder Alex Ljung said that the move is to help the company spin a profit. In a blog post, he explained: "By reducing our costs and continuing our revenue growth, we’re on our path to profitability and in control of SoundCloud’s independent future"
Ljung also promised the music service wasn’t going anywhere.
"Not in 50 days, not in 80 days or anytime in the foreseeable future," he wrote on the company's blog. "Your music is safe".
SoundCloud isn’t the only music streaming service struggling to make a profit. At present, there are two business models for streaming: Apple and Amazon’s subscription only services and the freemium models offered by SoundCloud, Spotify and Deezer.
Chris Carey, the founder and director of Media Insight Consulting, explains why it is a challenge for such companies to make a profit. "There's a perception barrier in getting people to pay for music. You've then got the challenge of them competing against each other and the success of one probably harming the other."
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