Advertising and Soundcloud’s Soul

I can imagine Soundcloud adding advertising in a way that doesn’t betray its soul.

The company’s soul is to serve sound creators. It’s not to serve advertisers. Thus browsing the site has no ads.

However some sound creators, basically the highly visible professional acts, need to monetize their plays. They don’t mind paying for hosting and a widget but that’s only part of what they need. Soundcloud is underserving them without enabling ad monetization. It serves their needs by enabling them to earn money from ads.

Problem: how can it sell advertising without gettings its incentives misaligned? It must continue to serve the bands first, not the advertisers.

Solution: If Soundcloud didn’t take any cut of the ad revenues, its incentives would remain aligned with the sound creators. It could charge a flat fee for this option, and create APIs that enabled third parties to sell ads.

Category: Uncategorized 4 comments »

4 Responses to “Advertising and Soundcloud’s Soul”

  1. Anthony V

    I don’t think the financial incentives are the issue here.

    If they can design an ad product that is attractive enough for advertisers and high quality enough for artists (which, judging by Youtube’s implementation, isn’t that hard), it’ll be fine.

    Where do you think Youtube is on this soul spectrum you are describing?

  2. Rusty Hodge

    I would hope that if they do add advertising, they offer a premium subscription option that has no ads.

  3. Lucas Gonze

    Anthony, I think Youtube’s customers are advertisers rather than creators. No question in my mind.

    As an example of how the financial incentives need to align with the soul of the company, think about Grooveshark’s new services for rights holders to upload their own work. GS is basically attempting to Soundcloud, or an audio-only YouTube, except with an intention of serving the advertisers. Unlike Soundcloud, Grooveshark doesn’t charge musicians.

    But GS’s soul is creating inventory to sell to advertisers, and it does that at the expense of relationships with musicians. So musicians by and large hate Grooveshark. The antagonism runs deep. So musicians are not flocking to upload to Grooveshark.

    (I can’t remember the name of the project, need to dig around to find it, and a casual googling didn’t turn it up).

  4. Lucas Gonze

    Rusty, that would make sense if it was priced as a value-add for the benefit of musicians. But musicians would need to see it as a profit center rather than an exploiter that’s underpaying them.

    Payments to musicians would need to be much higher than under Spotify. I imagine that many players would opt out completely, based on the common suspicion and distrust towards Spotify. Seems like a big can of worms for SC to open.

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