According to re/code, Twitter may be making another move into the music industry as they are reportedly considering a deal to buy SoundCloud.
SoundCloud is a music and audio-sharing company that offers a free service where users can upload and share audio across the Internet. SoundCloud touts itself as the ‘YouTube for audio’. As of October 2013, SoundCloud had a user based of 250 million, according to TechCrunch.
Earlier this year, SoundCloud was valued at $700 million, which means that if this deal does indeed go forward it would be Twitter’s most expensive acquisition to date.
The appeal of this potential acquisition for Twitter would be the opportunity to grow its user base. Twitter’s user growth has been a well documented disappointment to investors. A deal with SoundCloud could allow Twitter to expand its reach in a way that’s independent of its core service. For SoundCloud, a deal with Twitter would give them a chance to sell ads in conjunction with their music streams.
A deal with Twitter could also push SoundCloud to ink a deal with some of the major music labels and get permission to distribute copyrighted music, similar to YouTube. SoundCloud doesn’t have any licenses right now, so any copyrighted songs on the service are there without the owners’ permission, unless they were uploaded by the artist and/or label themselves.
The lack of any licenses has caused Twitter to shy away from SoundCloud in the past, such as neglecting to include SoundCloud as one of the services that would provide music in Twitter’s now-defunct Twitter Music app.
Despite that, statistics show Twitter users share SoundCloud links more than they share links from any other music service. A deal between the two companies seems like it would be a good fit, although both have declined to comment on the situation. We’ll just have to see how it plays out.