Spotify's SoundCloud Buy-Out Deal Is Put to an End

By Raizel Albano
The team-up that did not happen for Spotify and SoundCloud.
The team-up that did not happen for Spotify and SoundCloud.  That Drop.

It would have been a dream come true with two of the most popular music streaming services collaborating into producing the 'only' online music service that anybody would ever need. But following Spotify's decision to turn away from its purchase of SoundCloud, that dream can only remain up in the clouds.

Spotify is said to drop from the acquisition because of uncompromised negotiations that reflect Spotify and SoundCloud's differing plans for growth. Negotiations are said to have been on-going for months.

Both Spotify and SoundCloud are mum on the issue, but insider reports say Spotify fears the acquisition will hurt its bid to go public by 2017; and SoundCloud is looking into a buyout by a still unidentified company. The sale is said to be worth $1 billion.

The merger is supposed to be the music streaming industry's attempt to hold on to the market amidst free downloads and torrents, and in the face of its biggest competitor, Apple. Amazon.com is said to be developing its own music streaming service, too. With this tech giant's reach, it will be another big threat to small companies like Spotify and SoundCloud.

Cherie Hu of Forbes says, "Spotify and SoundCloud need each other." This is in consideration with Spotify having the money and SoundCloud having the fan base. In 2014, SoundCloud was said to be devalued at $700 million, and with losses of $44 million for that year alone.

Hu is all in for the merger and adds that the uniqueness of each platform is a big plus, given that SoundCloud has a lot of independent artists under its wing, and Spotify has licensed artists registered with it. SoundCloud also has the 'community' feel, while Spotify has the solid structure to keep that feel more algorithmically sound.

Even if SoundCloud is widely known as an independent label brand, big label artists are also found on SoundCloud. In fact, Drake and Kanye West use the platform to personalize the music reach to their fans. While they are not tremendously hit by the fate of Spotify and SoundCloud, small-time singers and songwriters are.

Some are not happy with the merger failure, with one writer saying that SoundCloud is the "easiest way for an artist to bring new material directly to their fans." With the Spotify buyout, some are fearing the fate of SoundCloud's thousands of independent artists who enjoy fame under the free upload label.

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