Classic Jack: Keeping You Ahead of the (NY) Times

Last March, MyersBizNet exclusively advised our members about the pending marketing and advertising opportunities that would soon be made available by Sound Cloud. Earlier this week, The New York Times published a lengthy announcement touting the company and its ad sales plans to incorporate advertising and let artists and labels collect royalties. The company will allow some record labels to have equity in the company, to prevent copyright issues. The first advertisers include Red Bull, Jaguar and Comedy Central. Content partners include Sony/ATV, BMG and Funny or Die

SoundCloud: YouTube of Audio is a Star at SxSW

Originally published March 17, 2014

Out of the primordial ooze that is SxSW, a new rising technology star has emerged. SoundCloud (www.soundcloud.com), a YouTube-like site for audio, recently raised over $60 million primarily from Peter Chernin's Chernin Group and Institutional Venture Partners. With a $700 million valuation (which its founder considers too low) and significant marketing and advertising applications, SoundCloud should be on the radar screen of media companies, marketers and agencies. The Berlin-based company was founded in 2009 and originally funded with. $ 3.3 million by London-based Doughty Hanson Technology Ventures.

On SoundCloud, anyone can upload either original or remixed music and instantaneously share it with friends and fans, offering significant advantages over Spotify and other streaming services. Music fans can discover new original music; politicians can invite and share audio uploads from constituents, and marketers can employ a suite of audio-based applications. More than 10 million people globally have downloaded the Android app alone. Free accounts allow users to upload up to two hours of audio each month and paid accounts, which are priced at $135 annually, allow unlimited uploading. Twelve hours of audio are being uploaded to SoundCloud every minute, which will increase exponentially as SoundCloud becomes the go-to social platform for sharing audio. SoundCloud differs from Pandora (for which SoundCloud investor Peter Chernin is a board member and advisor), iHeartRadio, Spotify and other streaming audio sites. SoundCloud CEO Alexander Ljung, says SoundCloud is a social platform for audio with the revenue models comparable to Facebook's. SoundCloud hopes to capitalize on the success Facebook has had with promoted posts through a similar model. Because registered users can add text comments directly into the live audio stream (adding a fun visual aspect to the listening experience) marketers can directly engage and communicate with fans of specific artists and music genres. While basic banner ads may have brought in a few euros for the Germany-based company, it is the potential of native advertising that could bring in serious revenue and that make it an attractive platform for marketers and advertising agencies. SoundCloud is opening a ten person New York office inthe process of hiring.

One artist who has broken through as an emerging star directly as a result of uploading her music to Sound Cloud isBanoffee, aka Martha Brown, whose debut single on Sound Cloud "Ninja" exploded. She now has released five songs on the platform and is touring and releasing an album.

SoundCloud co-founder Eric Wahlforss, in a rare interview with the Swedish business newspaper Dagens Industri , says SoundCloud ensures that the potential of the Internet for the production and distribution of music will be better realized. In his view, the related market is so big that the $ 700 million valuation will increase significantly. He views SoundCloud as "Radio of the Future." Expanding the platform beyond music, Congressman Steven Horsford (D-NV) has launched a new SoundCloud account to encourage his constituents to share stories about the issues that affect their lives. "My office receives a flood of phone calls daily from constituents concerned about the glacial pace of progress in Washington," said Horsford. "Far too often issues in Congress boil down to talking points and rhetoric. This tool will allow my constituents and other Nevadans to share their stories in their own words."

In spring 2013, SoundCloud announced a pilot program -- Pro Partners, which not only allows users to have an enhanced page of their own, but they are also able to promote their profiles. Like the sponsored accounts that Twitter users see at the top of their screens, SoundCloud will suggest their Pro Partners to users who are likely interested in them. In addition to promoting their profiles, Pro Partners are also able to use the platform for sharing their own audios. "Moving Sounds," as SoundCloud calls them, are slideshows that run alongside audio presentations. Adding a promotional feature to these moving sounds is a simple, natural native advertising extension. The initial group of Pro Partners included the Grammys, Red Bull, Snoop Lion and The Guardian, among others. SoundCloud is also in talks with several major record labels about distributing their music.

SoundCloud has upgraded the quality of stats available to both free users and Pro Partners. Free users can view which of their tracks are played, liked, reposted, downloaded, and commented on. Pro users can see their top fans on SoundCloud and the countries where their tracks are popular. Pro Unlimited accounts can also see the websites, apps, and social networks that people are listening from.

Red Bull and the Grammys both used SoundCloud during the pilot program to promote events. Through its Pro Partner profile, Red Bull featured some of the artists who would play on its stages at SxSW before the live events. The Grammys used their Pro Partner profile to showcase the winners of its CenterStage event. If a company commissions an artist to create a song for a commercial, they can then share that song on SoundCloud. In the commercial, people will only hear a 15- or 30-second clip of the song. The entire song, though, can be shared on SoundCloud. For local businesses, commissioning a national artist is usually beyond the advertising budget's limits. A local business can sponsor a local up-and-coming band, a realistic way to reach new people while supporting the local arts community.

Other established business tools for musicians continue to improve as well, including Bandzoogle and Bandcamp, which has added a music feed to their mobile app.

Blogger Dan Polaske writes in HypeBot that SoundCloud will "beat other streaming music services" because it is cheaper, is direct and instantaneous and is copyright friendly (which means the site does not restrict covers of copyright protected music). "According to TuneCore it takes 2-3 business days to get music on Spotify. In a world of up to the second content, that doesn't quite cut it. On SoundCloud your music is uploaded directly and is live almost instantaneously," says Polaske. He adds, "In order for your music to go live on most streaming services it must be cleared for copyrights. However, on SoundCloud it is totally acceptable. Well, for now. Regardless which side you are on in the copyright debate, there is no question that the ability to upload copyrighted material helps a platform grow. It has certainly helped YouTube. SoundCloud has focused on making a platform creators want to use. They will continue to improve their consumer experience, as mainstream adoption continues. This will only entice more and more creators to join. I don't believe streaming music is necessarily a zero sum game. However, I do believe that any platform that continues to offer unfiltered user generated content has a great chance of sticking around for a long time."

Separately, former News Corp. senior exec Peter Chernin has made several astute and profitable investments. In addition to SoundCloud, he has acquired a majority stake in Crunchyroll, and has a significant stake in Fullscreen,Base79, Scopely,Tumblr and Flipboard.