The Financial Times has reported that Spotify is in advanced talks to buy SoundCloud. The Swedish and German music-streaming service providers have been rivals in the said market. The acquisition could, interestingly, be beneficial to Twitter.
Spotify And SoundCloud's Strategic Options
The plan of Spotify to buy SoundCloud is not a surprise. It may be a good move for Spotify. The streaming provider has an intense competition with Apple. According to the Business Insider, Pandora, radio giant iHeartMedia and Amazon are also up for the challenge. It's going to be more evident as 2016 comes to an end.
Though Spotify is still the winner in the on-demand music market. It has 40 million paid and over 100 million active users. However, it lost $194 million last year. Meanwhile, Apple Music has 17 million subscribers.
The Wall Street Journal reported that Spotify was valued at $8.5 billion in June of last year. SoundCloud is not doing well financially. This is based on the financial filings reviewed by Music Business Worldwide. It was revealed that SoundCloud has lost $44.19 million in 2014 on a $19.37 million revenue.
SoundCloud has launched SoundCloud Go back in March. It's an on-demand service that is priced at $9.99 a month. It allows offline playback and gives access to a larger music catalog. The best thing is it is ad-free. Unfortunately, SoundCloud Go failed to get acclaim on its interface.
There is no exact figure on the SoundCloud Go subscriptions. The music-streaming service provider itself has over 175 million users.
According to Fortune, SoundCloud has declined to comment. Spotify could not immediately be reached for comment, as well.
Twitter Could Benefit
SoundCloud should be worth about $700 million. Twitter was confirmed to have made an investment last June. Though they did not clarify if it amounted to $70 million.
Twitter will receive its money should the said acquisition succeed. This could help Twitter since its stock has weakened in the past year.
