SoundCloud SEO-based SWOT Analysis – Not Your Mom’s MTV?

June 3, 2014 10:00 am Published by

SWOT

Curious to know how well SoundCloud converts users to paid subscribers? How it compares to its biggest competitors? Will it live up to its 700 million dollar valuation and continue growing? Or will it fade into obscurity like MTV?

This seems like a good opportunity to perform an SEO-based SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) comparing SoundCloud to the other leaders in the online music space: Pandora, Spotify, and Grooveshark.

We will analyze SoundCloud using SimilarWeb PRO, MajesticSEO, and some Google queries to understand the impact of desktop visitors, traffic sources, and search visibility on SoundCloud’s present and future performance.

Strengths:

  • Visitors – An average of 200 million desktop visits per month over the past 12 months to the SoundCloud site:

1_12-month-visits

    • 50% more traffic than Pandora (the 2nd largest site in group) and four times more traffic than Spotify (the smallest site in the group).

    • Registered users – Over 38 million monthly registered users (see footnote)1, based on searching for [site:nextpreview.soundcloud.com "*’s avatar"] in Google, which queries Google for pages containing the string: “*’s avatar”, which is an HTML footprint indicting a user’s stream page.

    • Engagement – Those users that do not bounce are highly engaged in terms of average visit duration (5:16 minutes) and average pages per visit (3.67).

    • Loyalty – 33% of average monthly visits were by logged in users (based on visits to – soundcloud.com/stream, a file-path that indicates a logged-in user).

    • Traction with music content creators and possibly upcoming deals with record labels.

  • Growth:

    • Desktop traffic to SoundCloud grew by 62% over past 12 months. It increased from 154 million in May, 2013 to 247 million in April, 2014:

    2_12-month-growth

    • Direct traffic – This jumped by over 60% over past 12 months for SoundCloud; direct traffic tends to be the most stable form of traffic and shows a high degree of brand awareness. Direct traffic for the other sites actually fell over that past 12 months, with Pandora tumbling the most:

    3_direct-traffic

    • Referral traffic – Grew by 28% since Jan, 2014 for SoundCloud, this a much larger increase than enjoyed by any of the other analyzed sites. Grooveshark and Pandora show signs of stagnation, and Spotify doubled its search visits:

    4_referral-traffic

  • Value:

    • Users – Fairly high quality users in terms of geography for all four analyzed sites; the top five countries driving traffic are US, UK, FR, DE, and BR. A large percentage of traffic is from other European countries. The below graph shows relative share of traffic each country drives to the analyzed sites, so for example, of all the US traffic sent to all four sites, 28.72% of it went to SoundCloud:

    5_traffic-share-by-country

    • Search traffic – over 99% of SoundCloud’s search engine traffic is organic, with almost no money spent on paid traffic (PPC), Spotify and Pandora both spend money on paid search engine traffic:

    6_organic-vs-ppc-search-trafic-share

    • Free content – SoundCloud currently pays no royalty fees to artists, publishers, or labels.

  • Visibility:

  • 7_soundcloud-indexed-pages

    • Backlinks – Over 251 million backlinks from 705,000 different referring domains, a great indication of reach among site owners, and an important ranking signal for SEO, which drives organic search traffic. These links are also an important source of traffic (data from http://www.majesticseo.com):

    • majestic_overview

        • Of these links, over 2,100 come from educational sites and over 600 are from governmental websites, both of which are often highly trusted by Google as well as being a strong indicator of the site’s perceived quality (see footnote)2.

    • Technology:

      • Streaming content – SoundCloud’s infrastructure is based on file streaming, and as internet speeds increase, current trends are moving away from downloading content and towards streaming, which is faster and easier for most users.

      • The site is built to make it easy to upload content for both desktop and mobile uses in an extremely social environment.

    Weaknesses:

    • Monetization and estimated conversions:

      • SoundCloud does not seem to have a clear monetization model, most users have free accounts and consume or curate music, as opposed to upload it. It is unclear how they intend to make money (see http://techcrunch.com/2014/01/25/soundcloud-raises-60-million-at-700-million-valuation/).

      • SoundCloud currently attempts to monetize in several ways, but their primary method seems to be through selling ‘Pro’ and ‘Unlimited’ subscriptions to users that need to upload more content than is possible with their free account.

      • The SoundCloud paid subscription sales funnel we analyzed:

      9_conversion-funnel

      • Using the SimilarWeb PRO ‘Popular Pages’ module, we were able to estimate how many pageviews the sales funnel received.

        The beginning of SoundCloud’s subscription sales funnel is the SoundCloud.com/pro page, which received 0.34% of the site’s 8,804,330,000 pageviews, which works out to 8,156,600 pageviews on the /pro page for combined worldwide traffic over 12 months.

        As we continue measuring pageviews down the funnel, only 0.06% occur on the ‘/buy/pro’ and 0.02% on the ‘/buy/pro-unlimited’ subscription order pages. These are the second step in the funnel, and one page away from a conversion/sale:

      10_conversion-popular-pages

      • Estimated conversions – There was not enough relative traffic to the end of the sales funnel to estimate conversions from worldwide traffic, but we were able to estimate how many paid subscriptions were sold over the past 12 months to visitors from the US and UK.

        We know that soundcloud.com/pro/purchased/pro-unlimited and soundcloud.com/pro/purchased/pro are thank-you pages, which are triggered after a user makes a purchase, so estimating how many times these pages were viewed is a great indication of how many sales were made.

        Based on the above, we can estimate that US visitors purchased 75,645 new subscriptions over the 12 months examined, and UK visitors purchased 45,019 subscriptions. This averages to 10,055 new subscriptions a month.

        Since the sales model is based on recurring payments, with unknown churn and refund rates, estimated yearly revenue from subscriptions is a maximum of 16 million dollars (assuming 0% churn and refund rates):

      11_conversions-over-12-months

    • Engagement

      • High bounce rates, or users that visit only one page on the site and then leaves. These average 49% over the past 12 months, which is much worse than any of the competing sites and shows either a bad target audience fit or a pain point that is compelling visitors to flee in droves:

      12_engagement

    • Social

      • Social visits dropped by 50% since Jan, 2014:

      13_social-drop

        • (Side note) – Pandora and Spotify were both granted Facebook app status at the same time, but while Pandora’s social traffic has stagnated over the past 12 months, Spotify’s traffic has almost doubled:

        pandor-and-spotify-social-compared

      • YouTube traffic is weak relative to Pandora. SoundCloud gets 6.81% of its social traffic from YouTube, while Pandora gets 17.51% of its social traffic from YouTube:

      14_youtube

    • Search Traffic

      • Low visibility in search engines, which drove only 15% of the site’s traffic over past 12 months, as can be seen in the below graph of SoundCloud’s traffic channels:

      15_traffic-sources

      • It should be noted that the other sites analyzed are also not getting much traffic from search, this vertical seems to generate most of its traffic from the direct and social channels, which seems like an overall weakness and a great opportunity. The graph below shows traffic share by channel for all four sites over the past 12 months:

      16_search-traffic-share

      • SoundCloud is not getting much keyword traffic from Google for the main music terms. Below are some examples of search keywords and their traffic share for each of the competitors over the past 12 months. Grooveshark and Pandora combined are getting the lion’s share of non-branded keyword traffic in almost all keywords analyzed:

        • “free music” – Grooveshark 62%, Pandora 30%, Spotify 8%, SoundCloud 0%

        • “music” – Pandora 89%, Grooveshark 8%, Spotify 3%, SoundCloud 0%

        • “music online” – Grooveshark 92%, Pandora 5%, Spotify 3%, SoundCloud 0%

        • “listen to music” – Grooveshark 87%, Pandora 9%, Spotify 4%, SoundCloud 0%

        • “online music” – Grooveshark 80%, Pandora 12%, Spotify 8%, SoundCloud 0%

        • “listen to free music” – Grooveshark 70%, Pandora 29%, Spotify 1%, SoundCloud 0%

        17_search-keywords

    • Geography

      • While SoundCloud has relatively high quality traffic in terms of geography, only 34.82% of their average traffic over the past 12 months came from the US. The chart below shows SoundCloud’s traffic breakdown from the top 5 countries (not to be confused with the User Value graph in the Strengths section above, which shows the relative share of traffic each site received from the top 5 countries):

      18_traffic-share-by-country

    Opportunities:

    • Traffic:

      • Increase reach outside of the US:

        • Pandora is only open to US, AU, and NZ users

        • Spotify is open to US, AU, parts of Europe and some of South & Central America

        • Grooveshark is open worldwide

      • As stated in Weakness section above, SoundCloud only gets 34% of its traffic from the US, there is a huge opportunity to improve the US user base.

      • SEO – Increasing organic traffic from search engines should be fairly easy since they have:

        • Many more backlinks than any of their competitors, and those backlinks seem to be of higher quality (screenshot from MajesticSEO):

        majestic_sites-compared

        • Much higher backlink velocity (screenshot from MajesticSEO):

        majestic_link-velocity

      • Referrals – Increase referral traffic from sources that seem to be working for their competitors, some examples are sites like:

        • allmusic.com, with about 14 million monthly visits, which only sends traffic to Spotify

        • lastfm.es, with about 4.3 million monthly visits, which only sends traffic to Spotify

        • ask.com, with about 2.5 billion monthly visits, which sends traffic mostly to Pandora

        • duckduckgo.com with about 26 million monthly visits, which sends traffic mostly to Pandora

        • shoppstop.com with about 24 million monthly visits, which sends traffic mostly to Pandora

        19_referring-sites-compared

    • Monetization:

      • Great opportunity to increase monetization, current efforts are so low, they have tremendous room for improvement of both existing funnels and creating new revenue streams – see the section about monetization and conversions in Weaknesses.

    • Universal search:

      • Google’s Universal Search mixes videos, images and news articles into the search results, often in top slots for competitive terms. Neither SoundCloud, nor any of its competitors get any real traffic from Google’s Video or News search, which has the potential to drive significant amounts of visitors, with a relatively small changes to the site’s code:

      20_universal-search

      • MTV.com is a great example of an otherwise failing site that is doing a great job driving search traffic from the Universal results in Google’s organic rankings, see graph showing MTV.com’s traffic by Universal search channel for April, 2014:

      21-universal-search-Mtv

    Threats:

    • Social:

      • SoundCloud’s social traffic barely increased over that past 12 months (from 40 to 48 million), while Spotify’s almost doubled (from 6 to 11.5 million).

        This is the graph of SoundCloud’s decline:

      22_social-decline-souondcloud

        And this is how Spotify jumped over the same time period:

      26_spotify-growth-compared

        Besides the fear of stagnation, 75% of SoundCloud’s social traffic came from Facebook, which has a greying demographic – teens are becoming increasingly weary of Facebook (see footnote)3, this does not bode well for future traffic:

      24_facebook-traffic

    • Competing sites:

      • Music is trendy, and trends come and go – does anyone remember Duran Duran? While SoundCloud’s traffic grew by 62% over the past 12 months:

      25_soundcloud_growth-compared

        Spotify’s traffic jumped by 118% over the same period:

      26_spotify-growth-compared

    • Engagement:

      • As discussed above, in terms of bounce rate, SoundCloud is far behind the other sites. Grooveshark seems to have much more engaged users, with an average 30% bounce rate and 5.12 pages per visit:

      27_engagement-compared

    • Legal/licensing issues:

      • SoundCloud has an uncertain future in regards to music copyrights, they are currently taking advantage of the Digital Millennium Copyright Act’s (DMCA) loophole in regards to copyright immunity to content uploaded by users, along with a proprietary audio fingerprinting system, but there are no guarantees that the legal horizon is clear.

    • Negative SEO:

      • This is a not a strategic danger, but it can impact SoundCloud’s search engine traffic in the short run. The site appears to be under a negative SEO attack by way of backlinks.

        Looking at the site’s backlinks with MajesticSEO, we find over 3,000 domains linking with the anchor text “risk factors & heart disease”, another 3,000 using the anchor “giving up smoking” and “controlling cholesterol”. This seems like an attempt to damage the site’s ranking by creating tens of thousands of low quality links using spammy anchor texts (screenshot from MajesticSEO):

      majestic_spam-anchors

        Google can be susceptible to backlinks as both positive, or negative, ranking indicators, depending on the perceived merit assigned to each link by their algorithm. Links from spammy sites, or with unrelated anchor text can harm a site’s ranking (but this is a hotly contested matter among the SEO community, see footnote)4.

    Closing Thoughts

    The striking conclusion of this SWOT analysis is that many of SoundCloud’s weaknesses are potential strengths, and that the Chinese cliché about the opportunity in crisis has struck again.

    SoundCloud is the largest player in the online music industry, but it feels much more like a young puppy than an old dog. We expect it to keep growing and to dwarf all the competing players in the online music market.

    The key aspects to focus on are traffic, engagement, and monetization. These have come up on both the positive and negative sides of the SWOT chart. As SoundCloud matures, we believe these elements will combine and interact to produce the winning trifecta that significantly impacts SoundCloud’s continuous growth.

    Footnotes:

    1. Number of results returned by Google is currently in flux, depending on the Google data center queried.

    2. This a matter for debate among SEOs. It is clear that a backlink is not considered more important, or given more weight, by Google just because it comes from an academic or governmental website. However, most academic and governmental sites tend to be authoritative and trusted by Google. These sites also tend to receive links from other authoritative and trusted websites. These factors tend to give links from academic or governmental websites considerable weight in Google’s search ranking algorithm.

    3. Study by Pew Research, “Teens, Social Media, and Privacy”, http://www.pewinternet.org/2013/05/21/teens-social-media-and-privacy/

    4. The effects of different negative SEO attacks on a site’s Google rankings is hotly contested, and beyond the scope of this analysis. See articles like http://searchenginewatch.com/article/2295568/Understanding-Link-Based-Negative-SEO, http://moz.com/blog/a-startling-case-study-of-manual-penalties-and-negative-seo, http://www.seroundtable.com/expedia-negative-seo-18010.html, https://news.ycombinator.com/item?id=5813306, or just query Google

    Boaz Sasson

    Currently the in-house evangelist at SimilarWeb. Suffering from a strong SEO-based bias to my marketing approach and life in general; pimping since Northern Lights was a search engine, not just a strand.
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