Soundcloud - Strategic Design Opportunity
Marketplace Study & Wireframes
Aaron Stern
06.27.2024
Competitive Survey
The popularity of streaming models for music audience is no surprise, but it is a highly competitive and poorly differentiated market. In the US market, Spotify, Apple, Amazon, YouTube, Tidal and SoundCloud all compete with little difference in value proposition.
Streaming displaced the digital music download model though one platform remained a success story in a small but influential corner of the internet.
Throughout the last two decades, Bandcamp built a strong reputation among artists and fans alike by creating a marketplace where ~80% of every dollar goes to the artist. As of 2022, digital music purchases represented approximately $1 billion dollars of annual revenue for the music industry though it pales in comparison to the $17 billion that streaming generated.
Bandcamp became fan and artists preferred platform as a reaction to the fraction-of-a-cent per stream payout model. The platform became a critical source of revenue for smaller artists while connecting them to global audiences.
However, Bandcamp has been sold twice since 2022, and the future of the beloved marketplace has become uncertain. The new owners have laid off their editorial staff and reduced the number of “Bandcamp Fridays” where 100% of revenue went directly to artists. A lot of chatter ensued on social media and in community forums about the future of Bandcamp and conscionable alternatives.
Streaming + Owning = Differentiator
IFPI estimated that digital music downloads and physical copies made up around $5.5 billion of revenue in 2022. A mid-weight platform like Soundcloud is long overdue to compete for this market share.
The giants in digital music sales are Apple and Amazon. Each firm has a media ecosystem and resources that dwarf Soundcloud several times over. I contend that their music strategy are functional tributaries to their total subscription offerings.
Second, Soundcloud is transforming their business model as we speak. They are offering digital distribution to artists and modernizing their underweight user interface.
By serving artists with distribution, catalogue management and digital revenue, they become a credible contender to digital distributors like CD Baby and Distrokid. They can challenge Bandcamp’s hold on digital music sales by assuming the same ethical consumption proposition to audiences while improving their UX. Eventually, they could move into offering physical goods (a longtime Spotify feature) and become the internet’s record store.
Audience Segmentation
- Casual Listeners - Streams music, creates playlists. Has not purchased songs, spends 1 hour a week on the app.
- Supporting Listeners - High volume of the Casual Listener behavior, has micro-influencing Taste Maker status. Purchases music, spends 5+ hours on app.
- Producers/Artists - Uploads track &, DJ sets, has ~1000 followers or more, uses digital distribution platform of some kind, looking for more monetization opportunities.
- DJs - Share similar volume of Producer/Artist behavior. Consistently looking to discover new music as well as share live sets, mixes and productions.
- Record Labels/Collectives - High volume of DJ/Producer behavior, manages a roster of artists, looking for cross-promotion opportunities, simplifying and streamlining all the disparate tools required to manage multiple careers.
SoundCloud has strengths as a social network and it can make granular community marketing efforts to draw sympathetic segments closer together. UX research, persona development, JTBD’s and relationship maps is outside the scope of this exercise but crucial for successful feature implementation.
Design
As I was pursuing this case study, I captured the evolving UI updates to create an ad-hoc design system. Once I had a feel for their visual language, I settled on my design wishlist for adding a checkout feature and the necessary accommodations in the navigation menu.
1. Move the ‘Stations’ feature to the lower navigation bar will improve accessibility to users who need to quickly play music.
2. Introduce the ‘Crate’ category. This will hold the user’s digital purchases and Wishlist, where they can save songs that would like buy.
3. Adding Icons to the Library improves visual hierarchy and category differentiation, reducing user cognitive load.
Overall, I felt that SoundCloud lacked visual hierarchy and a typographic system. I created a coherent type system for this project that improves the visual hierarchy on my wireframes.
I needed to find a good template for the mobile checkout experience. The outdoor retailer Backcountry shows excellent UX principles for their mobile system and I used their spacing principles for their input form. In my early drafts, I experimented with a light mode to distinguish it from the rest of the user flows.
The checkout flow will update Soundcloud’s “Behind the Track” button functionality by adding a “Buy Song” CTA style button.
The song will be added to the users’ bag where they can checkout, resume streaming/browsing or add it to a wishlist. After filling out their payment information, they will be presented with a success screen and a notification that purchased music will be added to the Crate.
The song will be added to the users’ bag where they can checkout, resume streaming/browsing or add it to a wishlist. After filling out their payment information, they will be presented with a success screen and a notification that purchased music will be added to the Crate.
The success screen is an excellent opportunity for A/B testing microcopy effects on developing returning customer behavior. Among the current digital music stores, success screens are typically non-existent or missing all together. Some testing variables to measure could be:
- Number of items added to bag.
- Number of items added to wishlist.
- Number of clicks on ‘buy song’ button.
- Number of future purchases
- Average time between purchases.
- Sign-ups for streaming subscription.
While it may seem counterintuitive to include a declining revenue stream as a part of the business model, I believe that the positioning opportunity and lack of meaningful competition make for compelling factors to pursue this as a piece of a larger strategy to gain more marketshare.
Consumption does not only signify taste and preference, it has increasingly become a factor in a moral compass. Aligning with equitable payout model is a strong position that SoundCloud’s competitors pay lip service to, but profit margin is built on reducing artist payouts and diversifying their products. Adding a marketplace feature will offer a compelling reason to proven music consumers to support artists on SoundCloud. The marketplace could incentivize these music consumers to subscribe to the streaming bundle and fill the void that Apple Music once held. The marketplace feature combined with digital distribution services and streaming has transformed SoundCloud from another streamer into a music marketplace with real points of differentiation.
Next Steps
The most crucial step for successful implementation is and development of User Personas. The broad categories I created above were based on general archetypes.
As Soundcloud moves into a new era of their product lifecycle, it’s important that they find partners in the rapidly changing internet ecosystem. Some potential avenues that have emerged since the peak of the app’s popularity are:
Consumption does not only signify taste and preference, it has increasingly become a factor in a moral compass. Aligning with equitable payout model is a strong position that SoundCloud’s competitors pay lip service to, but profit margin is built on reducing artist payouts and diversifying their products. Adding a marketplace feature will offer a compelling reason to proven music consumers to support artists on SoundCloud. The marketplace could incentivize these music consumers to subscribe to the streaming bundle and fill the void that Apple Music once held. The marketplace feature combined with digital distribution services and streaming has transformed SoundCloud from another streamer into a music marketplace with real points of differentiation.
Next Steps
The most crucial step for successful implementation is and development of User Personas. The broad categories I created above were based on general archetypes.
As Soundcloud moves into a new era of their product lifecycle, it’s important that they find partners in the rapidly changing internet ecosystem. Some potential avenues that have emerged since the peak of the app’s popularity are:
- Buy Music Club is a community that are motivated by the ethics of financially supporting musicians.
- Substack music journalists are a growing class of content creators who cater to niche audiences and galvanize their audiences with thought pieces & critiques.
- High profile independent musicians (James Blake, etc) who have become critical of the streaming model could be offered strategic partner roles, Executive or A&R roles in exchange for their insights and cultural capital.