Music platform SoundCloud said today it would cut about forty percent of its workforce, or 173 staffers, a move that highlighted the German company’s inability to create a stable business model on top of its large audience of 175 million listeners.
In January, SoundCloud said it was at risk of running out of money while a subscription tier launched last year hasn’t been as successful as the company’s executives hoped.
Offices in San Francisco and London will be shut as SoundCloud will consolidate operations at its headquarters in Berlin and another office in New York. The cost-cutting move should put it on a path to profitability and allow it to better compete against larger rivals Apple and Spotify.
“We need to ensure our path to long-term, independent success,” said SoundCloud co-founder and CEO Alex Ljung. “And in order to do this, it requires cost cutting, continued growth of our existing advertising and subscription revenue streams and a relentless focus on our unique competitive advantage—artists and creators.”
He said SoundCloud has doubled its revenue over the past 12 months.
SoundCloud is the popular destination for sharing independent recordings, mixes, podcasts and other user-generated audio content. Even established stars post material to the site before it’s released elsewhere while record labels use it to scout new talent.
Apple said at the Worldwide Developers Conference on June 5 that its music-streaming service had 27 million paying customers. Spotify announced around the same time that it had a total of 140 million users, of which 50 million were paid subscribers.