Spotify drops £535 million deal to take over SoundCloud

Report claims talks fell through over IPO fears

Spotify has reportedly dropped out of talks to take over SoundCloud.

Earlier this year, talks were apparently at an advanced stage, with the deal said to be worth £535 million.

However, after a report claimed that SoundCloud had lost $70 million in just two years and the company’s directors noted that “there are material uncertainties facing the business”, Spotify has now pulled out of the deal, reports TechCrunch.


A source reportedly said that the company ultimately walked away because it feared that an acquisition could negatively impact its IPO preparation.

Though Spotify has yet to announce its plans to go public, potential investors are optimistic that an IPO may come at some point in 2017.

Since it was launched in Sweden in 2007, SoundCloud has gone on to attract 175 million users a month. An average of 12 hours of music is uploaded to the site by artists every minute. Its largest investor is Twitter.

However, analysts say that SoundCloud started to see usage level out from 2014.

Meanwhile, Spotify remains the most-used streaming service, but has faced increasing competition from Apple Music and Tidal in recent years. Spotify has 40 million subscribers, compared to 17 million for Apple Music.


SoundCloud has also come under criticism from artists, with Four Tet calling the service “a total slice of shit” for musicians, saying that overly-tight copyright material software on SoundCloud had made it technically complicated to be able to upload remixes.

There have also been concerns that it adds songs to artists’ site without their permission as a way of monetising the service. However, SoundCloud remains one of the most recognised sites for new musicians to be able to get their music heard.

Spotify, which also started in Sweden, celebrates its tenth year this year. It too has failed to make a profit, though it had a revenue of £1.5 billion in 2015.