Music streaming app maker SoundCloud announced it is laying off 173 staff members – almost 40 per cent of its total workforce – “after careful and painful consideration” to reduce costs and put the company on a “path to profitability”.
In a blog post, co-founder Alex Ljung said while the company more than doubled revenue in the last 12 months, it still needs to cut costs and grow its existing advertising and subscription revenue streams to “ensure our path to long-term, independent success.”
He admitted the world of music streaming is extremely competitive and said “with more focus and a need to think about the long term, comes tough decisions.”
SoundCloud was set up nearly ten years ago and competes with apps including Spotify and Apple Music. Spotify, as well as Twitter, was once in talks to acquire SoundCloud.
TechCrunch estimates its 2016 revenue was around $57 million, which is not much when compared to Spotify’s $2 billion and Pandora’s $1.39 billion.
SoundCloud’s community stands at 200 million. The last time it reported numbers was 2014, when it generated revenue of €17.4 million ($19.8 million) and an operating loss of €39 million.
With nearly 40 per cent of its workforce gone, the SoundCloud team will be consolidated into its Berlin and New York offices, while those in San Fransisco and London will be shut down.
“By reducing our costs and continuing our revenue growth, we’re on our path to profitability and in control of SoundCloud’s independent future,” Ljung added.
The layoffs come a week after chief content officer (CCO) Stephen Bryan left the company following a three year tenure. The move, which was announced in late May, leaves Bryan’s former team reporting directly to SoundCloud’s executive leadership team rather than a new CCO being appointed.