After the recent whisper over Spotify’s interest to acquire SoundCloud, some speculated the end is drawing near for the loss-making streaming platform. Since the recent revelation of Sony and Universal’s stakes with the Berlin-based company, we’ve also heard about Google’s interest in snapping up SoundCloud, which now boasts more than 175m users worldwide.
Earlier last year, SoundCloud was reportedly hoping to sell its entity for $1bn to Spotify, a price tag that put off Twitter (now a SC investor) from buying in 2014. According to insiders from the music industry, the suggested price tag is somewhere close to $500m and has huge interest from Google.
Major labels including Universal, Sony and Warner are said to own stakes in the business and the value of shares recently revealed showed that Universal has a 4% in the company, with Sony on 3% and Warner on somewhere between 1% and 2%.
If SoundCloud was sold for $500m, the majors would therefore get a cut of around $45m between them. Since agreeing to allocation of equity to Universal and Sony as part of the global licensing deals in 2016, these shares percentages are likely to have been diluted. Nevertheless, if this buyout does happen, it’s going to cause some major stir up in the music streaming scene in 2017.
These share percentages are likely to have been diluted as SoundCloud has taken on more investment since agreeing to apportion Universal and Sony equity as part of global licensing deals in 2016.
If SoundCloud does sell to Google, it could be the beginning of a major shake-up in music streaming land in 2017.
SoundCloud hired Holly Lim, a former Google exec as its first ever CFO September last year specifically according to SoundCloud to ‘maintain financial health and capitalise on new opportunities for growth’.