May 27, 2014
What a SoundCloud Acquisition by Twitter Would Mean for Both Companies
Twitter is one of the world’s most popular social media sites, with over 255 million active monthly users, sending out more than 500 million Tweets each day according to 5WPR CEO Ronn Torossian. Even though it is recognized as being a brand-name in the world of social media, Twitter has recently had disappointing numbers as far as user-base growth. Thus, the company is actively seeking out ways to expand in order to please its investors, which is probably one of the reasons why they have recently expressed an interest in buying the music sharing site SoundCloud.
If the deal goes through, it will certainly not be a small acquisition. SoundCloud is valued at over $700 million and has more than 250 million registered users. This acquisition could thus become the most expensive acquisition that Twitter has made so far.
SoundCloud is widely known to be the YouTube of music. It is an audio sharing company that gives Internet users the chance to upload and share music for free. SoundCloud is popular with many in the music industry. It gives a platform for big name artists to stay in the spotlight, but it also helps up and coming musicians and Djs share their creations with a wider audience.
If the acquisition happens, Twitter could have the opportunity to grow their user base significantly, expanding the microblogging service’s reach independently from it core platform. As SoundCloud links are already the most shared ones on Twitter when it comes to music, there is an indication that there is already some overlap between both site’s user bases.
The deal could have numerous positive effects for SoundCloud too. The site may be able to sell ads on Twitter in conjunction with the music streams that it hosts. Currently, SoundCloud makes money by selling premium accounts and ads, but its advertising platform simply doesn’t have the reach of Twitter’s, which is set to generate more than $1 billion in ad revenue in 2014.
Making a deal with Twitter may also let SoundCloud partner up with many of the world’s major musical labels, which could potentially give them right to distribute copyrighted songs. Twitter would finally have a music service in its portfolio, which is a feature that would certainly interest many social media users. Previously, Twitter tried to create a music service called the Twitter Music App. While the project seemed promising at first, it never really got off the ground and was finally discontinued.