Spotify: Head In The Cloud?

Rumours are swirling that Spotify is gearing up to purchase Soundcloud, with the streaming service refusing to comment on a report from the Financial Times that such a deal is imminent.

The situation was cannily described in one tweet as  “one company losing loads of money is buying another company losing loads of money”, the acquisition would definitely be a strategic move fromSpotify to secure its current position at the top of the streaming tree- despite the fact that either service is yet to turn a profit.

Spotify reportedly lost $194 million in 2015 with sales of $2.2 billion, while SoundCloud is understood to have been losing €23m in 2013 and €39m in 2014.

To crunch the numbers on what such a deal would actually mean in terms of reach, SoundCloudclaims to have 175 million active users with access to 125 million tracks. This is more thanSpotify’s 30 million-plus, primarily due to the millions of uploaded remixes on SoundCloud.Soundcloud launched subscription service Soundcloud Go earlier this year. `

As pointed out on Music Ally, Soundcloud’s price may be lower than expected, a mere $700m according to Recode.

As reported by Music Business Worldwide, Spotify recently announced that it has already paid out $1.2bn to the music industry this year, with lifetime payments now topping $5bn.