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Twitter reportedly in talks to buy SoundCloud
By Chris Cooke | Published on Tuesday 20 May 2014
So roll up, roll up, place your bets, which mad mega-bucks tech deal will be completed first?
Will it be Apple’s $3.2 billion bid to buy Dr Dre’s crappy headphones and fledgling streaming service, with added Iovine to numb the pain and sweeten the deal? Will it be Google’s attempt to buy live gaming streamer Twitch, the online phenomenon that’s set to make people who pretend to play football as irrationally rich and famous as the people who kick real balls for a living? Or will it be Twitter, who now seem to feel the need for a SoundCloud in which its tweetering tweeterers can tweet?
Because yes, the latest techquisition being mooted in techsville is that Twitter is in talks to buy audio sharing network SoundCloud in what could be the second place social networking giant’s biggest company purchase to date, given that the last round of funding for the Berlin-based audio platform valued the firm at around $700 million. Neither side in this possible big tech deal have commented as yet since rumours that a purchase was being negotiated surfaced online last night, mainly via this Re/Code report.
There would be some logic to Twitter and SoundCloud combining. For the former, it would expand reach over night – something the now publicly-listed company’s shareholders have been calling for – even if there is presumably quite a bit of crossover between the user-bases of the two companies. It would also bring what research has shown to be the most shared source of music on the Twitter platform in-house, and allow the firm to have another go at capitalising on all the music-based messaging that takes place over its network.
Though, of course, there is a problem there, in that, although many artists and some labels opt to use SoundCloud to distribute streams of their content – it being popular with core music fans, the music community itself, and many gatekeepers in the industry and the media – the audio-sharing service doesn’t have any direct licensing deals with the music industry.
Because, and despite sometimes dubbing itself as the “YouTube of audio”, SoundCloud has generally resisted calls for it to become a fully licensed music service, it’s core business originally based on up-selling premium accounts to content makers, rather than selling subscriptions or pumping out advertising to content consumers. Something which has created tensions between SoundCloud and the labels, the latter generally loving the technology, but not necessarily the business plan.
Those tensions reportedly scuppered plans for Twitter to include SoundCloud within its ill-fated music app, the labels worrying that – although SoundCloud does comply efficiently with takedown notices from copyright owners – the Twitter music service might still have been helping distribute unlicensed content if it had included SoundCloud embeds.
There have been various moments of speculation over the years that SoundCloud was considering a new approach to help the labels generate revenue as well as distribute content, and the company has been dabbling in the advertising space of late. Which might be where this deal adds value to the audio-sharing company beyond the big pay-day for early investors, in that Twitter has a much more developed ad sales operation that could be used to properly take any new ad-funded SoundCloud products to market.
Indeed, if Twitter did buy SoundCloud in a mega-bucks deal, making the firm’s backers and founders a load of cash in the process, the pressure from the music industry on the audio service to become a revenue generator for content owners would likely increase significantly overnight, making such a plan an essential part of any acquisition.
