Twitter reportedly looking to buy SoundCloud after failing with first music venture

May 21, 2014

Twitter is reportedly looking to acquire SoundCloud in what could be its biggest acquisition to date. According to Re/code, which cites sources familiar with the matter, SoundCloud's 250 million consumer base is a major motivator behind the deal.

Berlin-based SoundCloud received a funding of $60 million earlier this year from Institutional Venture Partners along with The Chernin Group and others, and is valued at $700 million. The latest round of funding was said to facilitate licensing deals with record labels.

The deal would give Twitter a boost in the music segment after its own music discovery app, Twitter Music, failed to gain traction. The connected music service was available on iOS devices before it was eventually pulled. SoundCloud was originally considered to be one of the services that would facilitate music discovery within Twitter Music, but a final deal could not be reached as record labels were wary of the Berlin startup's lack of licensing deals.

An outright acquisition would be a win-win for both companies. Twitter has struggled to grow its user base since it went public last year, with investors clamoring for more revenues from advertising. Acquiring SoundCloud would be an easy way of getting 250 million additional consumers in a single go. The deal would also allow SoundCloud to run ads in its music streams.

Source: Re/code