According to the SoundCloud CEO however, they did this to ensure that SoundCloud remained a strong company and he wrote a blog post entitled SoundCloud is Here to Stay, just a few days ago to sort of quash the rumors that SoundCloud was shutting down. But I think from the community that is SoundCloud there’s a bit of alarm, I think, that this wonderful service might be going away due to the fact that they can’t pay the bills. And it’s understandable.

So let’s talk about the music ecosystem that SoundCloud is a part of. So the streaming music is ecosystem is dominated by Spotify of course. You also have Apple Music as a major player, Amazon Music is a player as well, and then Pandora, which is sort of the grandfather of streaming music, but not necessarily the most successful. Nonetheless, you can see there’s-

So we’re talking about trying to make money with music in the digital audio era. I think a service like Bandcamp, I don’t know their financials, but they have a clear business model in terms of you understand you go on there and you listen to independent music and then you can purchase it or you can purchase merchandise from the band. So it seems very clear like, “Okay, if I buy some music from an indie band on Bandcamp, Bandcamp will get a slice of that transaction.” And they let you know how much money is going through the service at any given time and who’s buying what. So it sort of reinforces the idea that you are paying independents for music.

The business model question is certainly one that’s larger than the scope of this show, but it is worrisome, I think, that original music, podcasts, things like this are not finding ways to generate revenue online. We see this across digitized content. Sometimes digitized content ends up making money, but many times the industry just gets squeezed. I think SoundCloud’s just the latest example of that, but you could also point to online writing, like how you make money doing that. And the entire journalism industry is under significant pressure, in large part because of digital disruption. So with that rambling preamble, Dirk, I’d love to hear your thoughts on the dangers of trying to make money or the difficulties of trying to make money with digital content.

The same thing is happening to journalism, to art, to music, to audio, however we want to sort of look at his, through digital. Where once upon a time, the bands, the content that you had access to was more local in nature or through the supply chain of records, cassettes, CDs supported by the touring of the bands. There was an infrastructure there that ultimately sucked its way down to all of the different localities where everything could be monetized. You could listen to something for free on the radio, but you couldn’t pick what you were listening to. You could call in and make a request, but they may or may not play it and they may or may not play it when you want.

Now with the digitization of content we have control over when we get the content and we also, at the same time, have access to many more creators than we ever did before. Even going back to the model where there was the records, cassettes, CDs so you were getting artists from all over the world you were still only seeing a slice of them, those that were selected by the editorial process of different publishing companies. Now, every garage band musician from every nation in the world is putting stuff up on SoundCloud, on YouTube, on different platforms, on different free platforms and you can discover them. However, they’re also sort of washing out a lot of other people. It’s the weird paradox. It’s a little different than paradox of choice, even though paradox of choice has a role in it. It’s the paradox of the fact that now so many people are able to put themselves out there yet it makes it much more difficult for consumers to go through and pick and understand and make their way and make sense of it.

So I’m sort of munging a couple of different things together, but what it’s doing at the end of the day is once upon a time it was possible for a lot of different people at a local level to make money by producing content, whether that be writing articles for a newspaper or doing something around music. Now, those local outlets have been replaced by global, multinational outlets making it really hard to make money with those things. Now, it’s much easier to get your stuff out there where, theoretically, it could be discovered by anyone, but it’s far harder to make money producing creative content.

Then suddenly you’re a SoundCloud and you have millions of these artists, I assume it’s that many. I would imagine you’d really need to make your money from those artists and/or enable them to make a little bit of money on the site. I know that we pay a pretty affordable yearly rate to have our podcast on SoundCloud and that enables people to discover the podcast there, but there’s probably no way that that yearly fee is anywhere near enough to support all the infrastructure that we’re able to access. I suppose if they had many, many, many more users they might be able to sustain the business that way, but it’s an interesting problem now. They’ve gone long enough that it’s become valuable to this community, but at the same time the way it’s constructed it’s doubtful that it’s sustainable. I kind of wonder if, clearly the company’s trying to do a little bit of a shuffle here and say, “No, we’re still going to be there for you.” but I think it’s planted the seed of doubt in all the users minds as to what do you do when SoundCloud goes away?

I know that we’re making plans to figure out where else to host the show. We’ve got our own servers and things so The Digital Life will be accessible via iTunes, it’s not a problem. It’s really the audience access that becomes … it’s a shame to lose that. And I imagine if we were a rock band or something that would be pretty upsetting to be on this platform and then realize that these millions of potential listeners and/or fans already are no longer going to be accessible. So my fervent hope is that SoundCloud figures a way to stay open, but I’m concerned for sure. I don’t think that that’s the likely outcome. I’m open to the possibility that it is, but if you were to ask me today, “Hey, in a year are we still going to be able to access all of the services from SoundCloud?” I’d say no. So I think they need to do a better job of reassuring people if they are going to stay there I think we need to know more. Dirk, your take on that.

And with Bandcamp I think the inverse is true. It’s something that, I mean yeah, you can listen to free content on there, but it’s also clearly trying to monetize you. And the problem with the Bandcamp model is, and I’ll just speak for myself now, I won’t claim any universality here, if I’m going to attend a show or want to buy merch from a band I’m going to want one of two things, A, love their stuff or B, the design of their merch is so cool and I don’t think a lot of people will be wearing it. It will be kind of unique to me, that it’s a style thing. It’s like here’s this cool, sort of unique thing that I can kind of get my hands on.

So what that means is for me to be predisposed to even wanting to get merch I need to be listening to the music. I need to be discovering and saying, “Wow, that’s great.” And once I’ve identified that’s great I’m open to the possibility of getting the merch, but if would then have to be really cool and well-designed and not too many people have it or I’m willing to go to the show, but I’ve got to love the music first and I don’t want to be in an interface that’s trying to sell me and push me to shows and get me to buy merch before I even know if I like the music or not. I want to learn the artist. I want to fall in love with the music and then be moved to a monetization platform. And I want that monetization platform to act like Amazon. I want it to be Amazon. I want it to go into my existing credit card, my existing account, my existing stuff. I want the single click purchase, I want the Prime shipping. I don’t want to be in this degraded experience because it’s some vertical sales thing. I want my sales to all be going to Amazon.

Now, I’ve already anticipate in end years, with end being more than one less than seven that’s going to change because I see Amazon adopting a lot of ugly, giant corporate big brother behaviors, but that future state aside at this moment in time I want everything through Amazon, dead simple. I don’t want it through some janky, account infrastructure of some other thing. And so that is going to take a lot of those products and move them right out of the consideration set. For me, that’s the environment in which people need to solve, a company like SoundCloud, needs to solve these revenue model issues. And I just think it’s outside the bounds of their DNA because their DNA is in this really well-crafted software that is great at discoverability, is great as usability, but is horrible at monetization.

And from the podcasters perspective we’ve found listeners on SoundCloud. It’s broadened our reach beyond the walled gardens that is iTunes. It’s made our podcast audience just a little bit bigger and in a very nice way. And it serves as a repository for all of our episodes. I mean you can see all 216 now episodes of The Digital Life there. So there’s a historical aspect to it as well. So for all those things we’re really, really grateful to SoundCloud. My hope, once again, is that there’s a business model that’s sustains them. And if some of that ends up coming back to us I know I’d be wiling to pay a little bit more for the service. So hopefully between the listeners, the producers, the creators, they’ll find a streamlined way to manage. But we all saw the collapse of so many different high flying audio properties over the last 20 years. I’ve seen this story play out before and once the … we don’t have any cash, cash is burning and we’re not replenishing it, once you’re in that downward spiral I think that’s a tough one to pull out of.