According to the Financial Times, Spotify is reportedly in the midst of working out a deal to a acquire SoundCloud. There are speculations that Apple’s continuous growth in the digital music market has turned out to be quite the competition for Spotify. This is said to be one of the reasons why they are speeding up the purchase process.
SoundCloud raised $100m in June from a group of investors including Twitter. It is currently valued around $700m. It is still unclear how much Spotify are willing to pay for the Berlin-based company. As of now, insiders believe that the discussion could fail to materialise.
SoundCloud might have 200 million members of the creative community and 135 million tracks on its platform, but it has still yet to make a profit. Despite of the setback, the music platform was still viewed as a threat as long as it was considering to offer a cheaper, mid-tier subscription service.
But that was until they decided to switch to SoundCloud Go earlier this year. “They’ve been absolutely dobbed by all the pressure from the labels to go in for a cookie-cutter subscription service which doesn’t fit their user base, content or catalogue. It’s an artefact ultimately,” said analyst Mark Mulligan, founder of Midea Research.
Spotify had apparently started talks with SoundCloud last spring, but nothing came out of it because of the asking price. Rich Greenfield, analyst with BTIG Research, said: “Spotify buying SoundCloud could be a sign they are trying to extend their significant lead in online music, as Apple, Google and Amazon are gearing up to compete more aggressively in music. The next question will be, is Pandora going to be left out and forgotten.”
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