Spotify has backed out of talks with SoundCloud over acquisition. The music union is not going to happen. The two companies were in advance talks over the acquisition but reports have come forward that claim the talks are over. Spotify fears that the acquisition will negatively impact the IPO preparation. The music company, Spotify, was going to go public in 2017 but there have been rumors that it would not due to funding issues with incentives tied to a listing.
Music company SoundCloud was going to be an additional licensing headache in the IPO of Spotify. This merger would have proved complex and financially straining because of the negotiations involved with music labels. SoundCloud user base has a catalogue of tracks where it meets creatives, indies and remixers.
SoundCloud loses another potential buyer
The acquisition of SoundCloud by Spotify has seen turmoil over the past two years as well. In the previous acquisitions the proposed price was the apparent reason. The deal could have benefited Spotify’s ad network and user base. It could strengthen the position of the company as a well-funded competitor in the music service industry. Spotify got to its 100 million user benchmark this summer with over 40 million paying for the service. Apple Music hit 20 million subscribers this week. It debut only 18 months ago. Amazon Prime Music is available in the United Kingdom. This is the company’s first expansion move outside the United States.
The next year will see Spotify IPO as an eagerly awaited public listing within the tech sector. Spotify made $1 billion in convertible debt this year in March. An estimation of SoundCloud annual revenue suggests that it jumped 43 percent year on year to reach likely $28 million. It can be attributed to the $9.99 subscription service launched this year. The most recent filings show that it lost $44 million in 2014 which got auditors to point out the need for additional financing to continue the business. Monetization has put forward a good front on business health. The recent move is an attempt to save business and expand. However, with financial instability and legal technicalities involve in the process of merger there is more delay. One can see the implications in the moduality of the procedures.
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