With the rise of Apple Music’s streaming service and Tidal hanging around somewhere out there, the market for music streaming has become increasingly competitive for industry leader Spotify. In September, news broke that Spotify was in negotiations to buy SoundCloud. While it was reported that the two streaming services were in “advanced talks,” it appears now that Spotify has dropped out of negotiations and is no longer attempting to acquire the streaming service.
A source “familiar with discussions” stated that Spotify “doesn’t need an additional licensing headache in a potential IPO year.” While Spotify hasn’t made any official announcements, it is widely speculated that the company will go public in 2017, with a funding round with incentives tied to a listing as a bit of fuel to the rumor mill. While the marriage could have been a slam-dunk for Spotfiy in an attempt to bring the indie and remix crowd into their catalogue, the rejection of the deal to avoid further financial costs to record labels is another indicator that the company is planning on going public.
This is now the third time Spotify has declined to acquire SoundCloud and while it is unclear how much Spotify was planning on paying, it was reported that the price point was the deciding factor the previous two times. No numbers have surfaced as to how much Spotify was offering or how much SoundCloud wanted, though Soundcloud recently was valued at $700m after a $100m fundraiser campaign from a group of investors which included Twitter. Despite their successful fundraising, the purchase also would have been a potential lifeline for the company who has yet to turn a profit despite their 200 million -strong creative community and the introduction of a monthly $9.99 subscription fee.
All of these moving pieces provide a glimpse into the landscape of the music streaming industry. Spotify and SoundCloud, two of Europe’s most successful tech start-ups, are beginning to feel the weight of both Apple and Amazon’s well-funded streaming services as the Silicon Valley titans look to take a portion of the $2.4 billion industry. Apple’s recent run of exclusives from high-profile artists has also provided a large boost in paid subscribers (Apple Music reported hitting 20 million subscribers this week), although Spotify refuses to ever partake in exclusives while simultaneously defending their free tier of customers.
While it looks like Spotify and SoundCloud remain independent for now, the ever-shifting landscape of music streaming will surely bring about more rumors of mergers and buy-outs in the future.