Spotify might be the icon for streaming today, but another name takes the epitome of streaming. This name is SoundCloud, the Berlin based music distribution service launched 10 years ago, which boasts 175 million monthly users and over 120 million tracks that consistently grows. This data is unmatched by any other streaming service, with Spotify coming second in membership with 100 million monthly users, and Apple coming in second in the amount of music with only a third of SoundCloud’s numbers.
However, it is important to note that streaming services like Spotify and Apple Music prioritize releasing licensed and popular music, whereas SoundCloud diverts away from such content. But without taking that into consideration, SoundCloud is the epicenter of sharing music, as it is essentially the standard where independent artists can share music, where musicians can find a solid fan base, and basically the most convenient way for the average person to listen to music.
With the company’s development of its premium service amplified by its partnerships with the major label records such as UMG last year, which allows paying subscribers access to licensed tracks, it appeared the company was on the rise with its already solidified user and content base. However, the company has been pandering on the prospect of selling itself, and idea that has proved to be very difficult for the company.
The first major acquisition failure emerged in 2014, when Twitter backed out of buying SoundCloud for somewhere around $2 Billion. Despite the idea that the move would propel Twitter’s interest in music, the deal had proved to be unappealing and unrewarding for the social media platform. And then came Spotify, who’s lengthy talks about a SoundCloud acquisition ended after the company chose not to buy the service, apparently due to their halting on their IPO alongside the staggering $1 Billion debt. The last has been a very flimsy discussion with Google, which was initiated in January. However, the most promising buyer for SoundCloud appears to be Twitter, who, despite its declining of the company in 2014, invested $70 million into the service last June.
What is interesting about these failed or pandering acquisitions is how the valuation of SoundCloud changes and its ongoing problems with maintaining revenue and losses. It is believed that Google wished to acquire SoundCloud for $500 Million, half of what was asked from Spotify. And announced in March, the company has claimed a valuation of around $250 Million, a price that may attract buyers. Luckily, in brighter prospects, the service has received further funding of $70 Million within the past week which has brought up the valuation to $320 Million.
Why is SoundCloud so unattractive to potential buyers? For one, previous discussions have yielded a price much to high, especially considering the company is experiencing consistent growth in losses year after year, and generally holds smaller and relatively unknown musicians and content. In addition, the company has no where near the amount needed to run a music distribution service that can compare to the streaming behemoths on the rise. To some extent, SoundCloud is on track for a slow demise, if it cannot secure a deal with a leading media company. It will be interesting to see what the company does in the coming months, especially considering how widely it is used among listeners.