Spotify set to spend $700 million to acquire rival Soundcloud

According to reports Spotify is planning a $700 million takeover of the rival Soundcloud. The two sides are reportedly in advanced discussions.

The report arrives amid intense competition in the streaming music sector. Sweden based Spotify remains the market leader but faces race from Apple Music and Amazon’s recently launched music service.

SoundCloud made its mark by allowing artists to upload their music and share it with fans on social media and blogs. It has established the company as an influential player in the music industry, especially in the dance music genre.

Recently this year, the company launched a pay-for streaming service similar to the offering from Spotify or Apple Music. The has so far failed to make a profit, but has Twitter as its most high profile investor.

One of the renowned analyst at consultancy Midia, said on the takeover claims.

“Soundcloud has been shopping itself around for some time, while Spotify needs to continue outpacing Apple as it heads towards an initial public offering.”

But a deal would be “far from a guaranteed winner for Spotify” as Soundcloud’s growth may have “peaked” in 2014, he said.

However Spotify, has seen its revenues reach $2.2 billion over the past year, but still has failed to make a reasonable profit. The platform offers music over the internet for nothing, with advertisements or ad-free for a fixed monthly rate.

Another giant Apple launched its own music streaming service last year, while there are many smaller companies such as Rhapsody, Tidal or Deezer offering a similar service. Spotify reportedly has 40 million paying subscribers, while next big player Apple Music has 17 million.

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