updated 04:24 pm EDT, Tue May 20, 2014
Audio sharing site could be Twitter's second attempt at music, growth solution
Twitter may be taking another stab at the music app business, as it is reportedly in talks with Soundcloud about a possible acquisition. Sources familiar with both companies have said that Twitter is considering a deal that would bring the social audio and music sharing service under its wing. The deal would mark the latest high profile purchase for Twitter, following its previous $350 million deal for MoPub in September 2013.
The cost may not come cheap for Twitter, considering Soundcloud's most recent round of funding had brought the value of the company up to $700 million, according to the Wall Street Journal. Even with the value so high, it may not be out of the question for Twitter to purchase the company for the boost in users alone; Soundcloud had announced in October 2013 that it had 250 million users. The deal could see Twitter's user base significantly increase, adding Soundcloud's user base with the 255 million active Twitter accounts (though there is bound to be a certain amount of overlap), reports Recode.
The micro-blogging company first attempted to bring music to its users with the #Music app, an application that was killed off after a year on the market. Rather than allowing users and creators to upload full songs or audio clips like Soundcloud, #Music was aimed at delivering music based on popularity. Soundcloud, on the other hand, allows users to direct their comments at specific points within clips, giving users a different level of interactivity than merely voting on popularity.
Benefits could also come for Soundcloud, as the purchase may give the service a better way to serve ads. Twitter pulled in $226 million in ad revenue in its first quarter 2014, with revenues for the 2013 fiscal year reported at $594 million. Soundcloud in 2013 announced its plan for "pro partner" accounts in 2013 that would give subscribers the ability to put moving pictures into the audio's wave form. While Soundcloud does have a revenue stream from monthly subscription fees, the in house ads could use a boost from a company that embraces selling ads as a major part of its business model.