The music streaming service Spotify may be in the process of buying the audio file hosting service SoundCloud. If you have never used SoundCloud, it is like YouTube, but instead of uploading videos, people upload sound files to SoundCloud. These files can be music recordings, random sounds or podcasts.
Although many sources are speculating that there might be talks going on between Spotify and SoundCloud and eventually Spotify may buy SoundCloud, many believe that Spotify may not buy SoundCloud after all.
For long SoundCloud has been contemplating selling itself. There have been talks about Twitter buying SoundCloud for almost 2 years but instead, Twitter ended up investing $ 70 million in the company. So far SoundCloud has been depending on advertising but gradually it is also introducing a subscription model in which people may have to pay the company in order to access the vast library of audio files it has. It has around 125 million tracks. People don’t use SoundCloud just to listen to music. All sorts of audio files are there on SoundCloud. Advertising hasn’t been working well for SoundCloud and even its SoundCloud Go service that asks people to pay hasn’t really picked up.
Spotify on the other hand has a strong advertising model. SoundCloud has a valuation of $ 700 million (based on 2014 evaluation) and Spotify has an $ 8.5 billion valuation. The biggest benefit of acquiring SoundCloud for Spotify will be perhaps it’s 175 million users (according to 2014 figures) that can be prospective Spotify subscribers.