SoundCloud has announced that it is closing its offices in San Francisco and London. Co-founder and CEO Alex Ljung revealed the news in a blog post. The company’s operations will be consolidated at its headquarters in Berlin and another office in New York.
The company is also laying off 173 employees, which is about 40 percent of its workforce of 420. According to Ljung, the layoffs are effective immediately. The moves are being described as cost cutting measures.
SoundCloud has become an indispensable resource for both musicians and many in the industry throughout the years. The audio streaming app has content that is largely based around uploads from its 175 million users in 190 countries. The company occupies a unique place as a platform for creators to share their audio work.
Despite its massive userbase, SoundCloud has struggled to create a profitable business model. Last year, losses rose past $50 million, despite growing revenues. The company entered into talks on two potential acquisitions, first to Twitter and then to Spotify, but never closed a deal with either. In January, SoundCloud said it was at risk of running out of money.
Soundcloud arranged a $70 million credit line in March of this year to help the business continue to operate. The company is also reportedly working on closing a round of funding believed to be in the region of $100 million. To date, SoundCloud has raised around $193 million from investors including Twitter, Universal, Sony and Warner Music.
At the time of the credit line, the company said in a statement that it was expecting 2.5-times year-on-year growth at the company. A spokesperson for the company said in a statement, “This new funding will enable SoundCloud to strategically grow our technology and personnel resources to fuel our expected 2.5-times year-over-year growth in 2017, while building a financially sustainable platform on which our connected community of creators, listeners and curators can thrive for years to come.”
SoundCloud has been focusing on building out revenue-generating services, including subscription tiers for premium content for users, special tiers for content creators, and advertising. Last year, SoundCloud finally launched its subscription streaming platform entitled Go. The company hasn’t revealed how many people are currently paying the $9.99 fee for the service.