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What SoundCloud — Yes, SoundCloud — can teach Tech Startups

Back in 1999, the only legal way to listen to music was to purchase a CD or turn on the radio. If you’re a younger Millennial, born into a world constantly connected by the internet, you probably don’t remember those days.

Some digital music services, like Pandora, appear to focus on consumers who remember the good old days, but others such as SoundCloud — which recently upped its competitive edge thanks to a licensing agreement with Universal Music — cater to a younger crowd.

In analysing the differences between Pandora and SoundCloud, we found that each service’s user base reflected the variances in its platform. Pandora’s algorithm-based, radio-esque playlists have only a 17 per cent Millennial user base. By contrast, SoundCloud’s community-curated — and often community-created — content has a user base that is 65 per cent Millennial.

Millennials are accustomed to on-demand, personalised experiences with community support. Although SoundCloud doesn’t get the media coverage of services like Apple Music, Spotify, Tidal, or Pandora, it’s a dominant worldwide force with 175 million unique monthly users who not only listen to music, but also curate it, share it, and upload their own content exclusively to the music service.

Attracting the Younger Generation

Millennials grew up with the internet and are savvy about spam, canned responses, and auto-generated messages. It’s more important than ever to be real, especially when interacting online.

SoundCloud taps into this where other services don’t by embedding community into the heart of its service. To attract more Millennials, tech startups can take these cues from SoundCloud.

1. Humanize your service.

Like YouTube, SoundCloud’s strength is in user-generated content. By providing a distribution platform for artists, DJs, and audio producers to promote their work and build a following, SoundCloud generates content faster than other music services can buy it. The audience is also kept more engaged, as many members (more than 12 million, in fact) have creations of their own to promote.

Millennials are attracted to services that allow for genuine human interaction. Integrate social network elements and create community-focused features, or at least a high level of user engagement, to entice younger customers. Make them feel involved in your company’s process, and encourage them to get creative.

Customer engagement isn’t limited to creative tools like music streaming. Venmo, Airbnb, and Lyft all achieved success by making community the core of their business. Whether it’s happening within a brand community or on social media, Millennials just want a place to connect.

2. Offer a free option.

Building and scaling an engaged community requires a free option, especially in today’s mobile world. Most people in their 20s and early 30s are dealing with unemployment, student loan debt, and mortgages. They don’t want to shell out premium prices for necessities, let alone streaming services — they want them to be free.

SoundCloud successfully weighed the risk of introducing ads to keep its free version viable. Forty-six percent of respondents in a 2015 Nielsen survey cited high cost as the primary reason they don’t subscribe to a music service. Right now, the pricing options are $9.99 or nothing. SoundCloud Go, the company’s paid streaming service, costs just that; its premium Pro service (tailored for those producing music) is just $7 a month. Ironically, SoundCloud’s free product means it can afford to be less focused on monetisation than other music services, as the free product is fueling the platform’s growth.

While a free version might not return an immediate profit to your business, a free experience, whether it’s a limited trial offer or a more long-term solution like Skype, for example, can be a smart business move. People want to try before they buy, and a solid free option, whether freemium or just a free trial, tends to gain more consumer attention than offering only a paid version. Plenty of businesses go this route, including Amazon, which gives students an extended free trial of its Prime services as part of its Amazon Student program.

3. Customize where you can.

While services like Pandora use algorithms to curate content, Spotify and SoundCloud encourage user-generated playlists.

Personalising marketing efforts keeps users from feeling spammed in any industry, but especially in an arena as personal as listening to music. Curating playlists or listening to original content on SoundCloud engages users because those features are individualised.

Many Millennials are even willing to trade some of their personal information for valuable tailored offers or special deals. Providing a customised experience for your consumers is quickly becoming standard practice. Don’t let your startup get left behind.

4. Incorporate social elements.

Because of the high level of community engagement helping drive its service’s growth, SoundCloud can allow free streaming without requiring users to register or provide personal information.

SoundCloud’s platform is specifically designed for socialisation and fostering a community. Artists can easily upload content that users can listen to, comment on, and share. And its recent agreement with Universal Music will broaden the range of artists that SoundCloud’s 175 million users each month can listen to, engage with, and share with friends.

Allow your audience to spread your message for you by enabling them to connect with their established social circles. You can even add incentives for social shares, which many platforms and games like Candy Crush have been doing for years.

5. Simplify your user interface.

Just because the Millennial audience is generally tech-savvy doesn’t mean it wants to spend time fumbling with your UI. By not even requiring visitors to sign up to stream its original content, SoundCloud makes its service simple to access and use.

SoundCloud’s emphasis on user practicality and versatility gives it other advantages over competitors. For example, it’s a go-to choice for sports outlets and news media that need a fast, simple way to stream embeddable audio. It’s a stalwart for Millennial-staffed offices alongside Apple’s iOS, Dropbox, and Buffer for its intuitive interface. Whatever your service provides, make it easy to understand, use, and share.

SoundCloud is clearly catering to the needs of the internet generation. If you’re looking for ways to better innovate your service and resonate with Millennial users, look to its success for inspiration.

Deren Baker, CEO of Jumpshot

Deren Baker
Deren Baker is the CEO of Jumpshot, a San Francisco-based startup that offers marketing analytics solutions tailored for the travel, retail, media, CPG, financial, and e-commerce industries.