Spotify is reportedly in advanced talks to acquire SoundCloud a streaming music service. This is to place them in a better position to compete against other major names in the streaming music market like Apple Music as well as Tidal and Amazon Prime.
SoundCloud was founded in 2007 and unlike Spotify allows anyone to upload their music to its platform currently made up of 125 million tracks from 12 million individual creators. The company also offers a subscription streaming service. Meanwhile, Spotify requires that any tracks belong to artists belong to a label and has a well-established user base including about 40 million paid subscribers.
Both Spotify and Soundcloud while being hugely popular, and both with high valuations - $8.5 billion and $700 respectively, are still losing money and lack cash. The merging of the two companies could inject cash into both and offer users access to more music than any other service. Spotify already has huge ad operations to it's free users that it could use to start monetizing SoundCloud while opening up the vibrant music community built around SoundCloud to its existing users. Currently, SoundCloud's user base is very young and is likely to listen to music for free.
Earlier this year Spotify have recently raised $1 billion with an intention to add to the company resources and add to its subscriber base without lowering its valuation despite being yet to make a profit.
Neither Spotify nor SoundCloud has commented on a potential buyout at this time.
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