Music streaming service Spotify is supposedly in “advanced talks” to purchase Soundcloud. The deal could be worth as much as $700 million (about RM2.9 billion), although this is still largely speculation.
The move comes at a strange time for Spotify, as the company has yet to turn a profit. Despite this, it has seen revenues steadily increase to $2.2 billion (about RM9 billion) in the last year.
Soundcloud itself is in worse condition than Spotify. It has failed to turn its business model into substantial revenue. The company allows users to upload their own music and share it with people in a sort of Youtube-for-music kind of way. Except that it relies on users buying subscriptions instead of advertising to make money.
Acquiring Soundcloud could give Spotify a boost against services like Tidal and Apple Music. Its rivals have been looking to exclusive tracks and locking listeners in; and it is likely that Spotify is instead insterested in simply expanding the amount of content it has from the creators on Soundcloud.
Spotify is currently the biggest player in the music streaming business with 40 million subscribers. It’s next biggest competitor, Apple, has 17 million. At the moment, it looks like Spotify is not willing to wait for anyone to catch up.