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Soundcloud may be forced to close due to $44m losses! (pg. 6)
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| DJ RANN |
Just read as fascinating blog post about Soundcloud.
Apparently, the Twitter deal (basically twitter wanted to buy SC as their own music platform had failed) went south becuase the two Founders of were demanding $1bn for it, although several analysts and funds had given a generous valuation of $700m. When they wouldn't back down Twitter told them to off. SC tried the same thing with Spotify who also told them to off, and then they went to google, who only offered $500m but have since withdrawn, knowing that they can pick the bones rather feed the carcass. |
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| tehlord |
What I hope (what I really, really hope) is that these companies are deliberately low balling what the 'CEO's at SC want to publicly diminish the value of it.
They deserve to lose the shirts off their back for the sham they have run for the last couple of years.
Cvnts. |
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| SystematicX1 |
On Friday, SoundCloud’s existing investors will determine if the company lives or dies. So you might want to back up your catalog.
The walls are caving in on SoundCloud. And its entire future is now hinging upon one vote.
Earlier, Digital Music News reported that the beleaguered streaming service was entertaining rescue investment from two groups. But according to a just-published report, those newer investors need to be approved by a bunch of older investors. And that’s not guaranteed.
The vote to rescue (or not) comes on Friday, August 11th, according to Axios writer Dan Primack. Citing a memo leaked to Axios, Primak notes that the incoming ‘rescue’ investors Raine Group and Temasek would receive preferential treatment. Which basically means that other investors would be de-prioritized, receive worsened terms, and have a harder time recovering their cash.
Ljung has warned that if the rescue package isn’t approved, the company won’t have enough money to survive. It would introduce a dangerous tailspin as employees jumped ship and the money dwindled to zero.
So essentially, a ‘no’ vote terminates the company. Or at least drastically reduces its chances of survival.
Existing investors would face some raw deal terms. In the case of an eventual fire-sale or liquidation, Raine and Temasek would get to recover their funds first, along with any other investors participating in this ‘Series F’. Sounds like a bad deal, except that the alternative is destroying SoundCloud forever.
SoundCloud is asking for an additional $170 million. The Series F sharply plunges SoundCloud’s pre-money valuation to $150 million.
One option for existing investors is to keep the company afloat and accept the bad terms. Then, work like hell to either liquidate or sell the company, a move that Ljung has previously resisted.
Others investors participating in this ‘Series F’ round include Union Square Ventures, Doughty Hanson and Atlantic Technology. So that complicates the analysis and decision matrix a bit.
Existing SoundCloud CEO Alex Ljung is obviously urging investors to vote yes. But here’s the kicker: ReCode has just reported that if the rescue round is approved, Ljung will probably be fired. In fact, a massive leadership shakeup is almost a certainty.
Accordingly, Vimeo CEO Kerry Trainor would assume the CEO helm, according to the Recode report. Whether Ljung would fight to remain CEO is another question.
Earlier, we’d heard that investors loved Ljung. But love has a funny way of turning into hate.
Over its multi-year history, SoundCloud has burned through more than $230 million. That doesn’t even include an additional $70 million in loans, undoubtedly accruing massive interest.
Meanwhile, attempts to launch a premium tier have floundered. SoundCloud Go has largely underwhelmed and failed to amass any subscribers. Spotify, meanwhile, has 60 million paying subscribers.
https://www.digitalmusicnews.com/20...stors-24-hours/ |
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| MSZ |
| Just pull it already, dont expect to have a business with a ty ing model. Its amazing how far they got. |
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| SystematicX1 |
I cant imagine the previous investors mentality right now.
And I am very curious how this will change the format of SC |
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| Mr.Mystery |
| quote: | Originally posted by SystematicX1
And I am very curious how this will change the format of SC |
They should just throw everything out and start from scratch. |
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| SystematicX1 |
| quote: | Originally posted by Mr.Mystery
They should just throw everything out and start from scratch. |
Would that even be possible? It is for sure their current structure is pure ,however...it is more so about the investors of previous.
These guys are getting the shaft for what they signed onto,not that I really care but..on a business sense, the current investment team might have ideas of their own.
And I can't imagine it being anywhere near the old model. I see conflict written all over this. |
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| DJ RANN |
I really don't see how they're going to save it.
The previous investors just got shafted, although they would have been holding shares in basically nothing had the last ditch investment not happened, so in that respect, it's better than nothing.
The main problem is that i don't see how a bank is going to suddenly change the model to something we all trust again and actually want to use. They couldn't make it work by trying to monetize it in the first place, and now they've just got more debt on the books.
It will need a complete ground up rebuild in terms of structure/model and in that case, why would anyone bother going when there's other alternatives that don't have the ty model? |
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| Mr.Mystery |
| quote: | Originally posted by SystematicX1
Would that even be possible? |
Nah, probably not, but I don't really see any other way of saving it. The newfound money will work for a while, but then we're right back to here again. |
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| SystematicX1 |
| quote: | Originally posted by DJ RANN
The main problem is that i don't see how a bank is going to suddenly change the model to something we all trust again and actually want to use.
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There isn't one..... Which I just cant figure out. The fact that multiple mimics are established for a cheaper version. Why would any investor go after a sinking ship that has a 60 million dollar reported loss in 3 years. What do they possibly think they will recover from this model? Its freakin doomed and Alex just got lucky. |
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