IDK what they do nowadays. I only release a new song every couple of months.
(shameless plug: soundcloud.com/bphogan)
They do that. If you want to hsot mroe than a few hours of music and additional stats you need to pay $10 month. I happily do that and it's a perfectly reasonable business model in my opinion. The problems, as you explained, started when Soundcloud tried to become a general and major label streaming service. A rather bad one compared to Spotify & Co. It's downright silly to go after such a crowded market when you have rather little to offer.
My guess is that there are more than enough artists, labels and users who actually want to pay and use the service to deliver music to their audience and that this was a profitable niche Soundcloud occupied, but the chase for growth made them lose focus.
Serving a service like SoundCloud isn't technically challenging or expensive. It's dealing with all of the legal stuff of people uploading music that's under license, people uploading songs that have uncleared samples in them and all that bullshit.
It's proabably ran by 5 engineers working on the service itself, 25 maintaining the DMCA platform and 270 lawyers.