CEO of Sound Cloud Michael Weissman emailed employees on Wednesday August 3 announcing staff reductions.
“We will be making reductions to our global team that will impact up to 20% of our business,” Weissman wrote in a memo obtained by Billboard. “Making change that affects people is incredibly difficult. But it is necessary given the difficult economic climate and the headwinds in the financial markets.
“Today’s change positions SoundCloud for the long term and puts us on the path to sustainable profitability,” Weissman added. “We have already started making prudent financial decisions across the business and this now extends to a reduction in our team.”
In a statement, a SoundCloud representative confirmed that the company “announced an approximately 20% reduction in its global workforce due to a significant business transformation and the challenging economic and financial environment.” “During this challenging time,” the rep added, “we are focused on providing support and resources to those making the transition while reinforcing our commitment to executing on our mission to lead the future of music.”
SoundCloud previously announced a number of layoffs in 2017 – at that time the company had cut around 40% of its workforce. Alex Ljungwho was then CEO, said the cuts were necessary for the company to “control” its “independent future”.
Over the next five years, SoundCloud evolved into profitability. The company secured a $170 million infusion led by The Raine Group and Temasek and a $75 million investment from Pandora’s parent company, SiriusXM. (In exchange, SiriusXM took a minority stake in the company.) SoundCloud announced its profitable first quarter of 2020, and earlier this year it said its annual revenue rate was around $300 million.
The company also expanded into distribution in 2019. More recently, SoundCloud rolled out a new user-centric royalty initiative, which allocates money by dividing the revenue generated by each individual, so that a hypothetical fan who only listens to two artists per month has his monthly fee of $10 split between them. Initially, user-centric royalties were only available to independent artists, but Warner Music Group made the program available to its roster in July.
Weissman’s email to employees this week noted that SoundCloud “will continue to focus on our mission to lead what’s to come in musicadding, “The business transformation we set in motion last year is driving everything we do and will continue to be our driving force.
US and UK employees affected by the layoffs “will be notified over the next few days,” according to Weissman’s post. SoundCloud also plans to host an All Hands meeting this week “to discuss these changes in more detail.”