SoundCloud, the Berlin-based web audio startup that recently raised $50 million in the new round of funding, has just reached the 10 million user milestone, and launched a new point of integration for Instagram users.  You can now turn Instagram pics into narrated, retro-looking slideshows.  There’s a similar feature for Storywheel.cc as well.  Storywheel.cc allows Instagram users to import their favorite pics and record an audio narrative using Flash in their browser.

SoundCloud has also launched a new product called Soundcloud Labs, which was actually produced by its employees at a hackathon last year.

SoundCloud was started by Alex Ljung and Eric Wahlforss in 2007, and has over 9 million clients in its kitty. The company started as a collaboration platform for musicians and deejays, and is looking to become a premier web audio platform, launching multiple mobile apps as part of its larger strategy.  The latest SoundCloud music app has become one of the top rated Facebook Timeline apps, and was featured as one of the initial apps available for Facebook Timeline users.

Despite its recent success, SoundCloud is part of an industry that’s currently facing a great deal of scrutiny thanks to the growing Megaupload debacle.  As the US Federal Government is ramping up its fight against illegal file sharing and hosting, the cloud space is feeling the squeeze. MegaUpload had a good deal of its 150 million registered users uploaded personal, and therefore legal, content, but the site was also the notorious home of illegal content as well.  SoundCloud also has tons of user generated content, comprised of people’s musical works that can be explored by other users, but there is copyrighted material uploaded to the service as well.  It’s a fine line to walk, as the tech industry faces another round of witch hunts in the cloud sector.  We’ll see how SoundCloud and others fair.