The rumoured Soundcloud takeover is “far from a guaranteed winner” for Spotify, claims one industry expert.
The music streaming giant is alleged to be in talks with rival Soundcloud over a possible takeover. The two are in “advanced negotiations” according to the Financial Times.
The takeover would come at a time when competition in music streaming is hotting-up, with Amazon’s newly launched music platform and intensified competition from long-standing rival Apple.
But Midia analyst Mark Mulligan said the deal was not necessarily a sure-fire success for Spotify, as he reckons Soundcloud’s growth peaked two years ago.
“Soundcloud’s Monthly Active User number: 175mln. Impressive enough, and 50mln more than Spotify’s 125mln. But Soundcloud hit that number in August 2014 and it hasn’t reported a bigger number since.”
With its initial public offering on the horizon, Spotify needs to continue outpacing its biggest competitor Apple, said Mulligan.
Spotify currently dominates the market and boasts 40mln subscribers, while Apple Music has just 17mln.
Germany’s Soundcloud - valued at US$700mln – has established itself as an influential player in the music industry by allowing artists to upload their own music, which can be shared across social media.
Earlier this year, it launched its own paid streaming service similar to that offered by Spotify.
Spotify saw revenues of US$2.2bn over the past year, but neither music streaming platform has managed to turn a profit.
The platform allows listeners to play music for free and is paid for by ad-revenue or a monthly subscription.