Soundcloud’s Investors and its “Freemium” Model

The social audio platform Soundcloud has used multiple ways to encourage its own growth and sustain itself as a viable business. First of all is Soundcloud’s reliance on initial capital investment inorder to afford server space for its cloud format. The German based social media startup’s major investments helped lead to an exponential growth in the number of registered users in the past four years. The first major investment was a 2.5 million euro deal raised by Doughty Hanson Ventures in early 2009, followed then by a huge 10 million dollar deal through a joint effort between Index Ventures and Union Square Ventures recently this January (of 2011.)

Something must be working for the company, because Soundcloud now boasts that it gets 20,000 new sound creators worldwide every single day and has reached the milestone of five million registered members, all accomplished in little under five years of doing business.

As well as initial investment, Soundcloud also uses the concept of a “Freemium” model, in which the basic capabilities of the site, such as registering an account for the use of media sharing, are given to the public for free, but also offers a tiered “premium” subscription model, starting at 29 Euro a month for the “Lite” premium services going up to “Pro Plus” premium for 59 Euro per month that offers even more expanded services. Services and features that are reserved for paying members include: more minutes of data allowed on the cloud, extra stats on who’s listening to your tracks and how, the ability to create more groups, more personalized players, and (frustrating as I’ve found it seeing as I’m only using the free model) the ability to edit tracks after you’ve posted them.

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