Another day, another industry-rattling potential buyout for the streaming music vertical. According to a report posted on the Financial Times website, Spotify is currently in talks to buy SoundCloud. While nothing has been confirmed by either company at this point, the mere prospect of such a combination of powerhouses is exciting, and the idea isn’t too far-fetched either.
This piece of news comes just a few months after SoundCloud officially entered the paid streaming music world by launching its Go product back in March. While there was initially plenty of excitement surrounding the powerful music site entering the streaming wars, not much has been heard from about Go since its debut, and it is suspected that the service has yet to accrue even one million paying subscribers.
While the Berlin-based music platform certainly wouldn’t come cheap, there are plenty of reasons why executives at Spotify are possibly considering such a purchase. According to the FT report, the two companies are nearing the end of negotiations, as the talks are being described as “advanced.” SoundCloud has reportedly been looking for a larger company to buy it since this summer, when a $1 billion price tag was floated. Both companies have recently raised a fair amount of money in the past year or so–$70 million for SoundCloud from Twitter TWTR -3.20%and $1 billion in debt financing for the Swedish streaming giant–which both puts Spotify in a better position to buy another company like SoundCloud, and which makes the latter even pricier.
This acquisition report is just the latest of many to emerge from the streaming music world, which is changing drastically at a rapid pace. While many of the reports that have surfaced of potential buyouts or mergers turn out to be false, there have been a number of cases where the transaction actually ended up taking place. Pandora purchased the remnants of a bankrupt Rdio late last year, and a few years back, Apple bought Beats, which was both a headphone business and a streaming platform. Tidal has been the focus of many of these purchasing rumors, and it has been linked to potential sales with both Apple AAPL +0.75% and Samsung, both of which eventually made it clear they were not interested in buying the Jay Z-fronted streaming platform.
A representative for Spotify claimed to have “have no comment or info” at this time.
Posted by Hugh McIntyre on Forbes, read the full article here.