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SoundCloud reportedly considering $1 billion sale

By | Published on Thursday 28 July 2016

SoundCloud

SoundCloud is considering selling up for a cool billion dollars – or so reckons Bloomberg – because with all those licences now in place, the future is clearly both bright and orange, and who wouldn’t want to pay a billion for the company? I’m planning on buying two.

The company’s founders and investors are, according to Bloomberg sources, mulling over possible future strategies for the business, which might include a sale. Though finding someone willing to pay that billion dollars won’t be easy. Not least because a recent funding round valued the start-up at $700 million, and some would argue that that is too high.

It’s widely thought that previous attempts to sell SoundCloud were scuppered by the music industry’s then increasing anger that the firm was operating without licences, and was therefore not paying revenue back to rights holders. Indeed, with its original business model, the rights holders were the client.

SoundCloud did eventually enter into licensing negotiations with the music rights companies, partly because its own investors were demanding alternative revenue streams, and those would require the participation of the record labels and music publishers. Though the talks dragged on, and were in part delayed by PRS For Music suing the company.

Eventually deals were done with all the majors and many of the indies, and even the PRS dispute was settled. All of which has let the company get on with evolving the ad funded platform it first launched in the US in 2014, and the SoundCloud Go subscription service that went live Stateside in March. Both ads and subscriptions were added here in the UK in May.

But does all that really make the business a more attractive purchase? After all, although there are some differences, SoundCloud is increasingly moving into the territory of the more conventional streaming music services, all of which are struggling to make any profit. The challenge that poses would make a ‘let’s bail’ strategy sensible for current investors, but also mean it will likely remain a hard sell with possible billion dollar bidders.



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