In an effort to maintain music streaming dominance, Spotify announced on September 28th that they are interested in purchasing the smaller music streaming platform, SoundCloud.
SoundCloud is used primarily by up-and-coming artists to promote their music for free. While Spotify does have a free service, most of its revenue comes from its paid subscriptions. In 2014, SoundCloud was valued at $700 million, although experts estimate that number has dropped. Spotify was most recently valued at $8.5B, although they too have lost some of their revenue. The company still has plans to go public next year.
If Spotify were to purchase SoundClud, they would attain its 175 million users. The purchase would make sense for SoundCloud and could be potentially profitable for its investors. Right now, it’s estimated that Spotify would pay between $700 million and $2 billion for SoundCloud. If this move happens, it will be another notch on the belt of Spotify, as it continues to try and assert itself as the premier streaming service over competitors like Tidal and Apple Music. Although the deal isn’t done, it’s said to be in “advanced talks.” We’ll have to wait and see how this purchase plays out.