I bet 99% of those 100,000 users are using the free service. Good luck convincing them to part with enough money to make this profitable and cover those bandwidth costs.

1. Rocket Network tried this and failed. They were a late 90’s startup founded by Thomas Dolby that was sold for a song in 2003 to Digidesign to become Digidelivery, who also couldn’t make it work so they sold it in 2007 to Asperasoft.com. It’s not exactly a new idea.

2. Musicians are notoriously poor and cheap (cf the massive piracy of music software). How does Soundcloud make money beyond advertising?

3. The few major studios and post houses still spending money are already signed up with Digidesign Digidelivery/Asperasoft so there is plenty of competition in the small professional market for such a service. As a result, SoundCloud looks like they are targetting the bedroom musicians, which takes you back to #2. How do you make any money out of them?

I did like the voiceover on their promo video though.