Apparently, Google Is Contemplating Buying SoundCloud
In an interesting move for the tech behemoth, rumors are floating around that Google is interested in purchasing failing audio distributing company, SoundCloud.
A report by Music Business Worldwide claims the Silicon Valley native is eyeing the Berlin-based company for a whopping $500 million. This is half the cost Spotify was going to acquire SoundCloud for, proposing a staggering $1 billion to obtain SoundCloud and its 175 million users. Late last year (as in a few months ago), however, The Swedish company cited a lack of foreseeable profitability in the streaming service (among a few key other nondisclosed reasons), causing the acquisition to fall through. (Twitter was going to buy the company back in 2014, but the same price tag was too high, apparently.) With the immense cult following SoundCloud has garnered and its purported failing as a standalone company, it was only a matter of time before someone scooped it up — and leave it to none other than the almighty tech powerhouse, Google. This acquisition is interesting because Google already has a service similar to SoundClood in Google Play Music, so the short- and long-term plans for the buyout aren’t clear just yet. It can be assumed, though, that Google may plan to implement SoundCloud’s streaming algorithms into their in-house code to offer more tools to listeners, as well as acquiring that massive number of users may make Google Play Music more appealing to Android users or patrons will Google accounts. (Google’s subscriber numbers are private, so it can only be interpreted that Google may want to bolster their subscriber count to rival that of Apple Music and Spotify.)
Curiously, it seems some major companies have stakes in SoundCloud. According to Music Business Worldwide — after having sifted through SoundCloud’s latest financial filings — Universal Music Leisure Ltd., Sony Music Entertainment, and Warner Music Inc. all own stakes in the company; looking at approximate estimates, Universal owns about four percent, Sony owns about three percent, and Warner’s stake hovers somewhere between one and two percent. This means that if SoundCloud did sell for the reported $500 million, each company would get roughly $45 million. (To break it down a little further, Universal would get $20 million, Sony would get $15 million, and Warner would get $10 million — all based on their approximate ownership in SoundCloud.) It’s unclear whether each company would retain their stake, but it can be assumed their contracts would be nulled because Google would be the sole owner of SoundCloud.
While neither SoundCloud nor Google Play Music nor the two combined are as popular as Apple Music or Spotify or Tidal, this buyout could really shake-up music streaming in the new year. And this isn’t the only acquisition purported to happen in 2017: MBW reported that Pandora Internet Radio might get bought out by Sirius XM in the coming months.
With both SoundCloud and Pandora out of the picture, that’ll mean the only streaming platforms available to those interested would be Apple’s Apple Music, Spotify, and Tidal. There always seems to be a trifecta in the world, and it seems Google wants to do battle with the trifecta of music and audio streaming. There are a few others in the game (such as Reverbnation, YouTube Red, and Deezer just to name a few), but they are nowhere near the pedigree of Apple Music, Spotify, or Tidal. It’ll be interesting to see how Google’s acquisition of SoundCloud will stack against these three giants and in the music and audio streaming business as a whole.
Whatever the case, this acquisition may end up spelling doom for the failing company. There’s no telling what Google plans to do with SoundCloud if the rumors are true.
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[Featured Image by Justin Sullivan/Getty Images]
