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Twitter isn’t considering a SoundCloud acquisition, though it was

By | Published on Wednesday 21 May 2014


So that story went past tense rather quickly, did it not? Rumours that Twitter was considering acquiring SoundCloud that circulated widely yesterday were, it seems, true, though probably not by the time you read them.

In that Twitter has been in talks with Berlin-based SoundCloud about buying the audio-sharing company, but the social networking firm let an exclusivity deadline pass without reaching any firm agreement about the acquisition, and now looks like it’s walked away from the deal entirely. For the time being at least.

According to the Wall Street Journal, the asking price for SoundCloud would be simply too high for the tweets firm. As noted yesterday, at its last round of financing SoundCloud was valued at $700 million, which is twice the price of Twitter’s biggest purchase to date. And while the publicly listed firm is under pressure from its shareholders to expand its reach, investors won’t want to pay over the odds to expand user base.

Another issue may have been SoundCloud’s relationship with the music industry. As previously reported, artists and labels like the SoundCloud technology, but many don’t like the fact there is no inbuilt system for content owners to generate revenue. Tensions already exist between some labels and SoundCloud, and said tensions would only increase if the company was the subject of a mega-bucks takeover.

There may well be a solution to those issues – in that with Twitter’s audience and growing ad sales abilities combined with SoundCloud’s popular and often-shared-on-Twitter audio platform – there may well be a service that could provide both promotional value and revenue to rights owners. But such a solution probably needs to be much more clearly defined, with the labels on board, before Twitter could take a gamble on the whole proposition.

Either way, it seems the deal was off before we knew it was on. Though speculation will no doubt now turn to whether Twitter approached SoundCloud, or the other way round, ie is the audio-sharing firm actively looking for a buyer. There were a few unsubstantiated rumours that it was before its last round of financing was secured, though went for another round of investment instead after no decent offers could be found.