In a recent case study, NetHosting examines the musician’s social network: SoundCloud. Taking the throne in 2007 as the go-to site for musicians and music fans all over the world, SoundCloud provides an online amphitheater of sorts for artists and music listeners to share and collaborate on music. Essentially, SoundCloud is the Facebook for aspiring musicians.

Alex Ljung, a self-proclaimed “Swede/UK Entrepreneur,” and artist Eric Wahlforss both saw a niche in the social networking space that needed to be filled. Flickr had been developed as a social network for photographers; Vimeo had the ground covered on homemade movie makers; but what about music?  Starting in Stockholm, Sweden, then finally established in Berlin Germany in 2007, SoundCloud was created to fill that niche.

Within months, SoundCloud was racing up the traffic rankings, even rivaling MySpace’s capabilities in audio sharing. In early 2009, the British investment company Doughty Hansen and Co., Technology Ventures, financed SoundCloud with 2.5 million Euro to help them reach 1 million subscribers by May 2010. Backed by their large and growing subscriber base, SoundCloud received an additional US$10 million from Union Square Ventures and Index Ventures. By June 2011, SoundCloud had over 5 million subscribers.

SoundCloud provides features to upload, record, and listen to all the tracks available on SoundCloud. All personal uploads and recordings are stored to personal profiles. It requires you to create an account which allows you to follow musicians, make friends, and listen to the tracks of others while giving feedback. Like other social networking sites, you can list your own personal information, music and music tastes, and anything else that interests you.

A feature that makes SoundCloud especially appealing to musicians and music fans is the comment feature. Users can make general and specific comments to other users on exact moments and measures of a song, allowing the option for more constructive critiques and collaboration. SoundCloud can also be integrated with Facebook and Twitter and songs can be tagged with a customized URL, making the sharing of music on other, more mainstream social networks even simpler.

SoundCloud obtained an Alexa rating of 313 on their list of most trafficked sites in the US and 366 in the world. This means that this grass roots, media sharing, 50-man social networking company needs some reliable and efficient server capabilities.

Hosted by Atom86, a Dutch hosting company, SoundCloud started off using a Sun Solaris-based server schematic which is known for scalability and being able to accommodate large and increasing data sets. SoundCloud then switched to an implementation of Nginx which is able to run on more operating systems. Nginx can also deploy fixed content at high speeds and can improve performance by increasing throughput by cutting down excess features.

The future of SoundCloud still remains to be decided. On one hand, the future looks pretty bright. SoundCloud just received US$50 million from Kleiner Perkins, putting the estimated valuation of SoundCloud to US$200 million. They are also starting to attract some larger musicians, such as Sir Paul McCartney, who gave the rights of one track of his new album, Valentine, to SoundCloud.

On the other hand, the future seems a little rocky for this audio sharing site. Their growth hasn’t climbed much higher since June while music-streaming sites, such as Spotify and Grooveshark, are gathering members left and right. Spreaker, a San Francisco based website entered the scene in 2009 and offers a service very similar to SoundCloud. Spreaker has also become a formidable opponent by releasing free apps onto the Android market.

In SoundCloud’s defense, it was made for and appeals to musicians while other streaming sites are geared to please the more mainstream listeners. And with their newly acquired US$50 million, they hope to fund more rapid expansion throughout the US.

SoundCloud is a compelling story of a website that filled in a key gap in the online social networking spectrum. Even more intriguing is that it is designed specifically for musicians instead of primarily listeners. All of the closet performers and garage bands now have place to be heard. It will be interesting to see where SoundCloud goes in the near future.