How SoundCloud's Broken Business Model Drove Artists Away: Insights from Ron Conway at Startup School SV 2014

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Sep 19, 2023

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How SoundCloud's Broken Business Model Drove Artists Away: Insights from Ron Conway at Startup School SV 2014

Introduction

SoundCloud, once hailed as the go-to platform for emerging artists to share their music and connect with fans, has faced numerous challenges over the years. From a broken business model to the rise of bad actors exploiting the system, SoundCloud's downfall can be attributed to several factors. In this article, we will explore the issues that led to artists leaving the platform and gain insights from Ron Conway's talk at Startup School SV 2014.

The Rise and Fall of SoundCloud

Initially, SoundCloud provided artists with a unique opportunity to showcase their music and gain exposure. However, this quickly turned sour as artists began to abuse the platform by constantly reposting their own tracks, pushing them back to the top of their followers' feeds every few days. This led to a flood of mediocre music and undisclosed advertising, diminishing the overall user experience.

SoundCloud attempted to address these issues by implementing various business models such as content-related ads and charging creators for premium accounts. However, the platform struggled to combat the influx of derivative copyrighted material, DJ sets, mashups, and unofficial remixes that violated copyright laws.

Moreover, SoundCloud's introduction of reposts, which allowed artists and promoters to artificially boost the number of streams a song received, further exacerbated the problem. Services even emerged that allowed artists to buy fake listens, likes, and followers, undermining the authenticity of the platform.

The Impact on Artists

As SoundCloud's popularity surged, it started favoring the biggest stars at the expense of smaller, up-and-coming artists. The platform's embrace of major labels discouraged the remix culture that had initially helped it thrive. SoundCloud's founders promised tools for monetization, but many indie artists still have no options to participate in the limited monetizing programs the platform offers.

Additionally, SoundCloud's heavy-handed approach to content policing and issuing strikes while accepting creators' payments for accounts and placing ads on their content created a one-sided relationship with artists. Instead of fostering a tight-knit community, SoundCloud became fractured, gamed, and understaffed.

Insights from Ron Conway

Ron Conway, a prominent investor and entrepreneur, shared valuable insights on what it takes to succeed as a founder during his talk at Startup School SV 2014. He emphasized the need for ambition, aggressiveness, and toughness when starting a company. Conway highlighted that being a founder is like a vocation, requiring a 24/7 commitment.

Conway stressed the importance of finding a co-founder who shares the same level of excitement and inspiration for the idea. Collaboration and shared dedication contribute to a strong foundation for success. He also emphasized the significance of product-market fit and understanding the target audience.

Furthermore, Conway acknowledged that failures are inevitable in the startup world, but investing in the traits of individuals rather than predicting success or failure is crucial. Founders who display a laser focus on their product, sometimes to the point of being perceived as arrogant, tend to be the most successful. Conway highlighted the importance of persistence, conviction, and a relentless drive to improve the product based on user feedback.

Actionable Advice

Based on the insights gained from the challenges faced by SoundCloud and Ron Conway's advice, here are three actionable pieces of advice for aspiring founders:

  • 1. Build a strong co-founding team: Find a co-founder who shares your passion and dedication for the idea. Collaborate and feed off each other's excitement to drive the company forward.
  • 2. Focus on product-market fit: Understand your target audience and tailor your product to meet their needs. Continuously iterate and improve based on user feedback to achieve explosive user growth.
  • 3. Embrace ambition and persistence: Be ambitious, aggressive, and tough. Be willing to work 24/7 and prioritize your company dream above all else. Persist in the face of challenges and remain convinced of the value your product brings.

Conclusion

SoundCloud's broken business model and the influx of bad actors ultimately drove artists away from the platform. The platform's failure to adequately address copyright infringement, its one-sided relationship with creators, and its inability to provide effective monetization options contributed to its downfall.

However, through analyzing the challenges faced by SoundCloud and gaining insights from experienced investors like Ron Conway, aspiring founders can learn valuable lessons. Building a strong co-founding team, focusing on product-market fit, and embracing ambition and persistence are key factors in navigating the challenging startup landscape.

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