Stop the Music: Twitter-SoundCloud Acquisition Talks Fall Apart

Well, how fast things change.  It looks like Twitter won’t be buying SoundCloud, after all. According to a report by the Wall Street Journal, Twitter let an exclusive negotiating period with SoundCloud expire this morning, and is no longer in discussions.  So why did Twitter back out of the talks?  According to someone familiar with the matter it was because “the numbers didn’t add up.”  That sounds troublesome for SoundCloud which has more than 250 million users and just recently raised $60 million at a $700 million valuation.

The Journal also reported that Twitter recently began trying to forge a partnership with Beats Music that would promote subscriptions to the music-streaming service, according to a person familiar with the talks. And in case you have been living under a rock, Beats is in talks to be acquired by Apple for $3.2 billion. Interesting to say the least.

As I mentioned yesterday, most of the content on SoundCloud is from indie artists and DJ’s, though some larger artists have used the service to promote their music.  I think one potential issue for any company acquiring a content company is licensing. SoundCloud’s lack of licensing agreements with music labels that would permit it to stream copyrighted material could definitely be a point of concern.

So despite the deal making a lot of sense (I think), it seems it will not be happening.