Music streaming service Spotify is in advanced talks to buy SoundCloud, according to Financial Times (FT), ahead of a possible IPO next year.

SoundCloud raised $100 million in June and was valued at around $700 million, although it is not clear how much Spotify is willing to pay for it. In fact, talks “could still collapse”, the report said.

Spotify is dealing with rival services like Apple Music, Amazon and Tidal. According to the FT, competition is “forcing independent players to consolidate to survive”.

Spotify has 100 million users, of which 40 million pay for its premium, ad-free service. It, like SoundCloud, has yet to post a profit. In 2015, its net loss worsened to €173 million, from €162 million in 2014.

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.

Apple said its music service had grown to 17 million subscribers this month.

This is 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.

The FT quoted Niklas Zennstrom, co-founder of Skype and Rdio, which was acquired by Pandora last year, as saying that “the big question for the streaming market is whether you can be a standalone company in a category when you have companies like Amazon and Apple looking at music as a loss leader, just to sell more iPhones or Echo speakers.”

“With Soundcloud’s subscription service, the two services are becoming more similar than they have been before, so a reason [to buy] would be a consolidation of subscriber bases and to combine talent pool,” he added.

It was reported in January last year that Spotify had decided to delay an IPO and was in talks with companies like mutual-fund operator T Rowe Price Group, which buy into companies ahead of an IPO.