A new report by The Financial Times claims that Spotify, one of the biggest music streaming services ever, is in talks of acquiring popular music sharing platform SoundCloud in a deal costing the former $700M that would ultimately buy the latter out entirely. No confirmation of said talks has been made yet, however we have reached out to Spotify and will update this if we hear back.
FT reports that if this deal were made, Spotify could move SoundCloud’s 125 million-song-containing library to their own and therefore expand the music available via the former’s service. This would also put less pressure on Spotify in terms of competition as one major competitor to the music streaming service will be eliminated. While these two factors seem to be the only major ones in favor of Spotify, I’m sure other elements play roles similar to these that just aren’t as obvious at this time.
Regarding SoundCloud’s side, this deal would be huge. If you recall, back in March SoundCloud announced a paid subscription service called SoundCloud Go that would give customers access to exclusive content. This ultimately flopped hideously as the competition between SoundCloud, Spotify, and even Apple Music wasn’t affected whatsoever. Since so much money was poured into developing this service, by being granted this $700M deal by Spotify, SoundCloud would more than make their cash back, something this company desperately needs as it struggles trying to stay current and popular like other streaming services. In addition, as noted by The Verge, Spotify is on the road for an IPO come summer 2017, so the acquisition Spotify is rumored to be talking about would certainly suite investors as well.
With the possible price of the deal being $700M, Spotify’s $8.5B they’re valued at won’t be harmed whatsoever. Therefore, the music streaming service may be looking to take SoundCloud under their wing by buying them out. Of course, like I said before, there’s no confirmation on whether talks like this even exist, so take this with a grain of salt. Nevertheless, it’ll be interesting to see if this deal becomes reality and not result into the whole Apple-TIDAL rumor.