Twitter invests $70m in SoundCloud two years after walking away from $1bn deal

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Two years after offering to buy SoundCloud for a reported $700m, Twitter has invested a sum ten times smaller into the now fully-licensed streaming service.

The original SoundCloud and Twitter deal reportedly fell through in 2014 over what was said to be a disagreement on price.

SoundCloud founders Eric Wahlforss and Alexander Ljung are understood to have demanded $1bn for their company, and Twitter walked away.

However, Twitter is now back in the game – albeit for a reduced investment.

The social network has invested around $70m into SoundCloud – the streaming platform’s largest funding round yet.

According to recode, the cash is said to be part of a round of investment from Twitter which will end up in the $100m range, valuing SoundCloud at… the $700m price tag Twitter offered for the whole company two years ago.

Since 2009, SoundCloud has raised a total of six funding rounds. The first was for $2.5m, rising to $10m in 2011, $50m in 2012, $60m in 2014, with $35m raised in debt financing in 2016.

“Earlier this year we made an investment in SoundCloud through Twitter Ventures to help support some of our efforts with creators. They’ve been great partners of ours over the years and their community-supported approach mirrors ours in many ways.”

Jack dorsey, twitterjack dorsey

There’s no inklings on what the new investment will be used for, but Twitter CEO Jack Dorsey (pictured) confirmed the news, saying: “Earlier this year we made an investment in SoundCloud through Twitter Ventures to help support some of our efforts with creators.

”They’ve been great partners of ours over the years and their community-supported approach mirrors ours in many ways.”

The two companies have worked together on streaming Audio Cards, which allows users discover and listen to audio directly within their Twitter timelines.

Twitter once had its own music destination via an app and website that were both pulled one year after launch in 2014.

The app integrated with other services like Spotify and Rdio, recommending users tracks based on artists they’d followed.

Nothing similar has arisen since, and it’s not absurd to think a closer tie-up with SoundCloud could arrive in future.

Since the initial Twitter deal, SoundCloud has secured licensing deals with the three major labels and Merlin, settled a lawsuit with PRS, and launched its subscription service, Go, earlier this year.

However, whilst transforming into a fully-licensed streaming service, SoundCloud as a business has entered into a downward spiral.

As MBW wrote in March, with cumulative losses of €74.7m ($84m) between 2012-2014, the Berlin-based streamer is over-reliant on investment and under severe pressure to fix its business model.

In 2014, SoundCloud was €30m in debt before trying to win any new customers, distributing any royalties or paying any tax.

Which leaves us wondering just how far that $70m will stretch.

Music Business Worldwide

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