Spotify drops SoundCloud acquisition plans - Mobile World Live

Spotify drops SoundCloud acquisition plans

09 DEC 2016

Music service Spotify has walked away from plans to buy Berlin-based music creation and promotion platform SoundCloud because the process would have interfered with its flotation plans, according to the Financial Times.

The company believed the costs and licensing agreements needed to acquire SoundCloud would “slow its path” towards an initial public offering (IPO) that is planned for next year, the report said.

The two were in advanced talks in September, as Spotify attempts to ramp up against rival services like Apple Music, Amazon and Tidal. This week, Apple Music said it had gained 20 million paying customers since launching 18 months ago.

Spotify has 100 million users, of which 40 million pay for its premium, ad-free service. It has worked to diversify content through video and podcasts but, like SoundCloud, has yet to post a profit. In 2015, its net loss widened to €173 million, from €162 million in 2014. It is valued at around $8.5 billion.

Meanwhile SoundCloud has a community of 200 million. The last time it reported numbers was 2014, when it had revenue of €17.4 million and an operating loss of €39 million.

This was not the first time Spotify has looked into a deal with SoundCloud. It reportedly had “reasonably detailed” talks with SoundCloud last year, but thought the asking price was too much.

SoundCloud and Spotify declined to comment.

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Saleha Riaz

Saleha joined Mobile World Live in October 2014 as a reporter and works across all e-newsletters - creating content, writing blogs and reports as well as conducting feature interviews...More

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