Spotify in 'Advanced Talks' to Purchase SoundCloud

[Soni Sanjay]

Um, this doesn't sound good. It would definitely (if done right) give Spotify an advantage with that kind of users.

Imagine if you could upload music to Spotify and everyone could listen to your track?

 

[heifetz7]

I was really hoping Apple would buy out Soundcloud. It's basically the "Connect" functionality they were hoping for with a huge community already using it.

Yes, actually I forgot to mentions this. Soundcloud has a huge social aspect and community that doesn't exist with any other streaming music service. The social scribbling and commenting during a song is great, and doesn't exist anywhere else. I wonder why someone else doesn't add that feature.

 

[TsMkLg068426]

This is terrible stupid Spotify going to ruin Soundcloud thank god for Apple music.

 

[wigby]

Wonder why Apple isn't buying Soundcloud instead. If they're willing to pay 3bn for Beats, SoundCloud would be a bargain and a drop in the bucket for them. And more importantly, Soundcloud has a much younger audience than Beats.

SoundCloud is just a streaming Napster. Apple would never be able to convert those listeners to paying subscribers.

 

[JoEw]

They paid 3bn for Beats Music's label contracts, Jimmy Iovine's contacts within the industry, and Dr. Dre's name.

And the majority of the premium headphone market... it was a great deal all around.

 

[Glassed Silver]

It would be horrible if Apple purchased Soundcloud, because their game plan would be to absorb it. At least with Spotify we have a chance they'll leave it alone and find a way to monetize it.

True, still a good idea to make backups of the songs you like on there soon.

Glassed Silver:ios

 

[2457282]

Right now, Spotify has more users than Apple, so when this article says buying SoundCloud will give them an edge over Apple, I am confused. Also, since Spotify is losing money and has always lost money, how does buying another service that makes no money help. And where do they get the money to buy them.

 

[LV426]

SoundCloud is just a streaming Napster.

Nah. I use it to find out what the background music is when I'm in the pub. On the rare occasion it's something I like, I might buy it on iTunes later.

 

[JimmyJimmyYam]

Throw in a free SoundCloud Pro subscription, and I might actually be tempted to subscribe to a streaming service for the first time...

 

[heifetz7]

Right now, Spotify has more users than Apple, so when this article says buying SoundCloud will give them an edge over Apple, I am confused. Also, since Spotify is losing money and has always lost money, how does buying another service that makes no money help. And where do they get the money to buy them.

I'm guessing Spotify is losing money because it has a very high cost base and it spends a lot on marketing to try to get new users. It could make money if it choses to decrease how much it spends on marketing, but its growth will probably slow down by a lot, or maybe even decrease as current users start leaving.

I doubt apple makes money on its music streaming service either if it takes into account ALL the costs associated with running it. It probably doesn't because the music service uses a lot of the infrastructure, employees that are used in other areas at Apple, and it makes money selling music, which subsidizes the streaming service.

I could see the reason why it would make sense for Spotify to purchase Soundcloud, just like how Amazon keeps purchasing smaller e-tailers. Spotify can integrate soundcloud "premium" into it's current subscription service, and that'll make it more attractive for subscribers and easier for it to get new users. It probably doesn't make sense for it to shut down soundcloud's free service because it'll get a lot of backlash, but who knows.

 

[2457282]

I'm guessing Spotify is losing money because it has a very high cost base and it spends a lot on marketing to try to get new users. It could make money if it choses to decrease how much it spends on marketing, but it's growth will probably slow down by a lot, or maybe even decrease as current users start leaving.

I doubt apple makes money on its music streaming service either if it takes into account ALL the costs associated with running it. It probably doesn't because the music service uses a lot of the infrastructure, employees that are used in other areas at Apple, and it makes money selling music, which subsidizes the streaming service.

I could see the reason why it would make sense for Spotify to purchase Soundcloud, just like how Amazon keeps purchasing smaller e-tailers. Spotify can integrate soundcloud "premium" into it's current subscription service, and that'll make it more attractive for subscribers and easier for it to get new users. It probably doesn't make sense for it to shut down soundcloud's free service because it'll get a lot of backlash, but who knows.

We are both guessing here to be sure, and your guesses are certainly plausible. I just want to point out that for Apple, at worst, Apple Music would be considered a loss leader that helps sell more iphones - something that brings them a lot of profit. Spotify does not have any profit making enterprise to fund a "loss leader." Therefore continuing to lose money and then go out and buy another company that is not making any seems odd. Maybe a desperate move. Maybe they see something that they believe will get them to profitability. For me the bottom line is that after years of losing money, Spotify needs to be careful. I can't imagine their investors will continue to dump money into them much longer. If they don't find a way to turn a profit soon, they could be in real trouble. I know that Jeff Bezos ran Amazon as a losing business for about 6 years (i may be off on the years, but it was a lot) before showing any profit. I am not sure how patient investors are these days.

 

[heifetz7]

We are both guessing here to be sure, and your guesses are certainly plausible. I just want to point out that for Apple, at worst, Apple Music would be considered a loss leader that helps sell more iphones - something that brings them a lot of profit. Spotify does not have any profit making enterprise to fund a "loss leader." Therefore continuing to lose money and then go out and buy another company that is not making any seems odd. Maybe a desperate move. Maybe they see something that they believe will get them to profitability. For me the bottom line is that after years of losing money, Spotify needs to be careful. I can't imagine their investors will continue to dump money into them much longer. If they don't find a way to turn a profit soon, they could be in real trouble. I know that Jeff Bezos ran Amazon as a losing business for about 6 years (i may be off on the years, but it was a lot) before showing any profit. I am not sure how patient investors are these days.

Sure, of course music is a feature for Apple, just as a lot of projects were for Microsoft since they could subsidize everything with Office.

I guess Spotify probably wants to position itself for a sale at some point, who will be in a position or want to buy it? I could imagine one of the big players, Amazon (free spotify membership with Prime), Facebook (more eyeballs, serve ads) could be interested.

 

[djang0]

This would be awful. SoundCloud is a place for aspiring artists and the like to get their content out to those that aren't behind a paywall and taking this away from them by purchasing their outlet would be disastrous. Plus I use SoundCloud and Apple Music in conjunction and if all that other music disappeared I would be sad.

I couldn't have said it better! Thank you for sharing these thoughts.

 

[wigby]

Nah. I use it to find out what the background music is when I'm in the pub. On the rare occasion it's something I like, I might buy it on iTunes later.

The same thing can be said for Napster. The point is that the ones playing the music that heard never paid for it in the first place.

 

[Merkie]

The difference is Amazon could stop burning money if it wanted to do so on their moonshot type projects and nearly instantly be profitable. Not so much for Spotify.

There's always a narrative, that fact that you don't know one doesn't mean there isn't one.