Is Spotify Buying Soundcloud?

Based on an initial report from the Financial Times, there’s a reasonable chance that streaming-music giant Spotify could buy SoundCloud. We’ve heard many times before that SoundCloud was on the market, including famous talks with Twitter. It turned out that Twitter was only investing – but it seems like Spotify buying SoundCloud could be a reality.

Why Spotify Buying SoundCloud Makes Sense

SoundCloud was one of the first streaming music sites to really carve out a unique niche for themselves – but unlike the more successful streaming businesses, the business plan has always been in question. Only last year did SoundCloud really start monetizing playsvia advertisements and a membership that allowed listeners to skip them.

So why would Spotify buy Soundcloud? There’s three solid reasons that we can think of:

  • Library: Sure, Spotify has a massive library of released music. But adding on SoundCloud’s repository of over 125 million songs would be huge, particularly because a lot of that content will be unreleased and original work that otherwise wouldn’t make it onto Spotify. Especially if they solve licensing for remixes – read on.
  • Solving Licensing On SoundCloud Content: We reported earlier this year that Spotify started working with MixBank to legally stream DJ mixes, mashups, unofficial remixes, bootlegs, etc. While this hasn’t really started to appear in content yet, we could very easily see Spotify running the entire SoundCloud library through MixBank’s licensing process and then getting the rights to stream everything (even content that was previously taken down) on their service. This would be huge for DJs and producers who have felt the squish from recent copyright takedowns on SoundCloud.
  • Active Users: Spotify has way more users that SoundCloud, but as TechCrunch reported earlier this year, SoundCloud has way more monthly active listeners: “Spotify has only 75 million active users compared to SoundCloud’s more than 175 million monthly listeners.” Adding a whole bunch of active users to Spotify will be a major boon for their monetization (ads or membership) strategy.  

A Good Investment? 

This is more up for debate, but let’s just say that in terms of valuations, SoundCloud is a tiny drop in the bucket compared to Spotify. This means that putting together the capital to buy SoundCloud at their recent $700 million valuation would be pretty easy. Spotify was valued at $8.5 billion in June of 2015 – so not too extreme of an investment for them.

Would it be worth it? That’s the question at hand – let us know your thoughts in the comments below.

Comments (21)
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  • RB

    Soundcloud “Groups” is gone, now this. Can’t a brother just share some free tracks and get some in return?

  • Fatmandy

    Spotify becomes a master label to release and license the treasure trove of bootlegs on SoundCloud. They could flaunt the power to fast track new music and clear samples into their monetised service, serving label revenue to labels via fresh music that is bang on trend and current. There’s opportunity for a ground breaking platform here, that joins all the dots from bootleg hero to corporate margins.

  • CUSP

    This move mirrors the Monsanto purchase by Bayer in at least two ways. 1) At some point the company being purchased had respect in the market, by innovating their own way forward, but through mid-steps of upper management, became… 2) The company being purchased is damaged goods and at some point the Mergers and Acquisitions team has decided that it’s better to absorb the weaker company instead of breaking it up and selling off the assets, sinking all of the losses into what remains of the unsellable parts, and enjoying the tax benefits of zero tax liability.

    I can think of a few reasons for absorbing a fully-functional company vs. parting out the acquired company, but these companies already do pretty much the same thing, so I believe this must have been a condition of the sale. All hail the conquerors, we will finally see the end of the blight on society that was Sound Cloud.

    I’m curious to see why they would keep the company mostly intact. It certainly goes against good business sense to me.

  • calgarc

    meh, the business side of things have always been fucked… get back to the studio and have fun 🙂

  • Booboo Head

    F@ck Spotify and everything they do.

  • James Aaron

    the biggest negative i see coming to fruition is that spotify will (since they are, in effect, controlled by labels now) make it harder for independent artists to get heard (not that it’s easy on soundcloud). imo they both suck, soundcloud’s monetization doesn’t pay much at all compared to spotify and spotify’s playlists are very difficult to get added to w/o using a playlisting service, which is a dubious endeavor. at least with soundcloud there are services, like reposts, that actually get the music out there to a wider audience and level the playing field a tiny little bit.

    at the end of the day it’s all about money in the music ‘business’ (another dubious adjective when describing anything that happens within that industry). i get it, everyone wants to make money for the most part, but the onus is on the artist to get themselves heard and it’s just getting harder and harder as more artists are able to get their music on platforms very easily. it’s great for listeners though as the choices are nearly endless and artists basically have to give their art away in order to be heard.

  • Anthony Alonso

    As long as they bring back groups, I will be happy. :-p On the label end, it will be great to see how the fusion will work with linking to purchase sights outside of spotify. On the artist end, SoundCloud has become a great place for people to put out some amazing bootlegs that otherwise would never see the light. I hope that doesn’t go away.


      jepp. witout groups SC is dead, il find somthing else!

  • QCube

    If they would be somehow conected, I would appreciate it. Because I like soundcloud more, I even deleted spotify on my phone again. It has not enough content I would like to pay for, but it would add some albums I would listen to. On the other hand, If they would give me the posibility to listen to all the Spotify and Soundcloud tracks offline, I would gladly take the offer and even pay for it. Because you do not have steady internetconection while driving which leads to pauses in the soundcloudplayback at the moment which is, lets say not that nice ^^. And if it would be possible to monetize own content in europe on soundcloud, that would be nice as well…

    • HStreetLandlord

      you can save offline with both spotify and soundcloud paid services.

      • QCube

        Ok nice, but unfortunately there is no paid soundclloud service in Germany yet :/

  • deejae snafu

    too bad spotify isnt publicly traded….

    • Spacecamp

      Why’s that?

      • deejae snafu

        well when one company buys another company , it can be a good opportunity to invest….like when western digital and sandisk merged for instance.

  • squirrel squirrel squirrel

    “Based on an initial report from the Financial Times…” [citation needed]

    Is there a link?