Two of the most popular streaming platforms of the world are now looking to merge their capabilities and create a singular music behemoth. Yes, you heard me right folks! Spotify is in advanced talks with rival music streaming service SoundCloud for a possible acquisition, reports Financial Times. Details of the transaction are still sparse, but this will a value addition to Spotify’s arsenal who is now facing a heated competition from Apple Music.
European streaming platform Spotify and SoundCloud, who’ve been around longer, are now facing some serious competition from fledging music platforms launched by Silicon Valley tech behemoths. Apple, Google and Amazon, who’ve both launched their own streaming platforms a year ago, have forced the two aforementioned companies to resort to consolidation and pickup more funds to survive.
If you see the subscriber count for these music services, then you’d be able to sketch a clearer picture of the whole scenario. Launched in 2008, Spotify now has a total of 100 million listeners and has just recently hit 40 million paying subscribers per week. While Apple Music, launched last year alongside iOS 9, has seen flock to use its service since the last year. It currently has 17 million subscribers, which are expected to grow even more with the improved experience on iOS 10.
Though the acquisition deal is in advanced stages, people aware of the development say that it is still unclear how much the streaming giant is willing to pay for SoundCloud’s humongous business. There is still the fear of discussions breaking down and the deal not going through.
SoundCloud has a 200 million strong listener community and over 135 million tracks(including remixes) on its platform, but that isn’t exactly what Spotify is after. Spotify itself has an exclusive and strong streaming platform but it lacks on the community and social front, something SoundCloud is quite good at. The latter also has a decent bank balance, thanks to Twitter who recently invested $70 million into the venture at a $700 million valuation. It has also picked up $1 billion in multiple tranches of debt financing in March this year.
With the addition of SoundCloud to its arsenal, Spotify wants to send a strong message across to its unsure investors. Spotify wants to reiterate the facts and tell them that it is ready to expand beyond its capabilities to show the true potential of their streaming service. And since it is now also planning an initial public offering next year, this could help them bulk up and introduce new offerings like podcast and videos to take on Apple Music in the long run.
Clarifying his intentions for the future on his platform, Spotify chief executive Daniel Ek said,
The next decade for us is very much about ensuring that even more of these artists can live on their music, and bringing them together with a new audience. Today our users say ‘introduce me to new music’, [and] what the artists say is ‘help me finding my audience’. Essentially, that’s two sides of the same coin.