What happens when great content ties up with a great user base? You get a glimpse at the future. This is what must be the idea behind the reported talks of Spotify acquiring Soundcloud.
What happens when great content ties up with a great user base? You get a glimpse at the future. This is what must be the idea behind the reported talks of Spotify acquiring Soundcloud. Apart from the addition of the music library, even the much broader reach might ensure the future of music streaming through this partnership. According to a report in The Financial Times, Spotify has been in ‘advanced’ level talks to acquire indie-favorite music streaming website SoundCloud. Spotify is one of the best that there is, yet it has a long way to go in order to challenge everyone else. It has become a recent favourite among the millennials because of the ease and content, as well as an innovative technology it keeps adding to it. In the app, there are options like Daily Mixes, Discover Weekly, and Release Radar which have some of the best content. The music content it so great that even mixtapes created is reliable enough to be enjoyed for a while, which cannot be said about many music streaming websites.
Soundcloud in itself has not been far behind. It has always been an indie favourite. Even little known upcoming artists with great music can be found on the app. Even the mixtapes on Soundcloud are so great that it can compete with Spotify at any level. But the best thing about this app is that anyone can upload content to the website whenever they wish to, which cannot be said for Spotify. In Spotify, the user will have to be a part of a label in order to upload music. Now, the worst part is, neither of these two companies is making money. Spotify with its increased base might be getting greater revenues, yet it is not making any profits. At the same time, Soundcloud’s position is much worse. It is so broke, that it has gone public in asking for capital injection.
Spotify has around 40 million users on its website, and if the acquisition happens, Soundcloud can give up on its premium offers which anyway did not help them much. Spotify in March this year raised a $1 billion in debt financing, which can be helpful for Soundcloud too. Apart from that Spotify has a huge advertisement base, which can help fund SoundCloud. Interestingly, SoundCloud has a unique user base of young people listening to music, free of cost. It would be interesting to see how they merge the different demographics of users, one which listens to free music and one which subscribes to fully licensed tracks. Yet, it is undeniable that the tie-up will help in creating a super music streaming service which will have latest hits by Justin Beiber to obscure music by underground rock artists.
The only problem is if they could maintain each other’s integrity and stick with what made them popular. While SoundCloud had the backing of hard working indie artists which led it to get a young and vibrant community, Spotify had the exact opposite of its own glamour. If they cannot harness this, the deal can be a bust. Also, it remains to be seen if Spotify gets rid of the idea of music labels, and instead become the future of independent music. After all, it sure does not want to go the Rdio way. Rdio, which was once a cult favourite because of its amazing interface, instead went on to get acquired by Pandora for $ 75million dollars.