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SoundCloud launches £5.99 subscription package with less content

By | Published on Tuesday 28 February 2017

SoundCloud

SoundCloud has revamped its premium offering by putting a £5.99 option (or $4.99 in the US) onto the menu. The lower priced version will offer much of the functionality of the £9.99 SoundCloud subscription service, but less music to choose from.

SoundCloud was relatively late to the subscription party of course, putting its SoundCloud Go option live last year after long drawn out negotiations with the music industry to secure licensing deals.

Both SoundCloud and its label partners hoped that the digital firm might be able to convert some of its massive freebie userbase into paying customers, partly by putting ads on the free service to annoy everyone, and partly by offering premium subscribers access to the millions of tracks that the bigger labels had been endeavouring to keep off the SoundCloud site while it was still an unlicensed set-up.

SoundCloud’s shift into advertising and subscriptions – over and above its original business model of charging the content creators a fee to host their tracks on the platform – was partly about placating the music industry which, like with YouTube, recognised the marketing value of SoundCloud, but increasingly saw it as a competitor to the royalty generating streaming services like Spotify and Apple Music. But it was also about generating new revenue streams for cash-strapped SoundCloud itself.

While there are no official figures for sign-ups to SoundCloud Go, the general consensus is that it had a relatively lacklustre launch. The introduction of the £5.99 tier, therefore, could be seen as a second attempt to convert those freebie users into paying customers. The hope being that the lower price point makes it more attractive, possibly to those SoundCloud customers who are already Spotify and Apple Music subscribers, who might be persuaded to pay £6 a month for extra functionality, but who don’t want to pay the full £9.99 simply to access major label content they get via their existing streaming service.

That said, if that is the target audience, £5.99 might still be too high a price point. Indeed, psychologically speaking, the difference between £5.99 in the UK and $4.99 in the US could be significant, the former somehow seeming much less attractive for what is basically an enhanced functionality package rather than a content offer.

Nonetheless, SoundCloud’s introduction of the £5.99 tier – which labels and artists can seemingly opt in or out of as they please – is interesting given the widespread belief that future growth of the streaming market depends on the industry offering some cheaper options for more causal music consumers alongside the existing £10 a month arrangements.

The challenge, of course, is working out what those cheaper subscription offers look like, given the fear that if they are too good all your current £10 a month subscribers will downgrade, so that the streaming market might generate less revenue overall.

Confirming the launch of the lower cost subscription service, SoundCloud CEO Alexander Ljung said this morning. “By expanding our offering, we not only enhance the experience for listeners on the platform, but also unlock new revenue opportunities to further expand our creator-payout programme”.



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