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The music streaming site SoundCloud revealed that approximately $70 million lost between 2013 and 2014. The issue is horrible enough for the company to gain more capital in the next 12 months. The main goal is required to have a huge stock of money towards the administrative expenses to grow its service.
The financial records were released to the public by SoundCloud. The leading platform for creating, listening, and sharing sound lost €23.1 million for the year 2013 and the operating loss of €39 million for 2014. The investment in technology and marketing headcount increased faster than the company's revenues.
The annual report unveiled that the directors were required to consider whether the group can continue in operational existence. It was confirmed that the SoundCloud will have adequate resources to continue in operational existence even though there were material uncertainties the business is facing. The Berlin-based sound creating company reportedly spends $64 million to generate just $19.5 million income in 2014.
The Financial Times published that the company could run out of cash by the end of 2017 unless it persuades new investors. According to the Music Business Worldwide, SoundCloud lost almost $52 million in 2015, and Spotify was in process of acquiring SoundCloud to the tune to $1 billion. However, Spotify dropped the negotiations because it was preparing for an Initial Public Offering (IPO) in 2017.
The biggest issue that SoundCloud has been facing financially is the average revenue per user. Though the platform has 175 million users, the income generated is only equated to 11.2 cents per users. It's way lower than the other streaming competitors such as Spotify and Pandora. Spotify has $27 per user while Pandora generated 100 times as much as SoundCloud.
The streaming company is required rising on the venture to remain solvent. SoundCloud raised $77 million in 2016. However, it will not be enough to fuel the loss and to remain sustainable. If SoundCloud will not focus on balancing the financial sheets, it may be forced to shut the operations down.