According to “people familiar with the matter” SoundCloud are considering a sale of their community-driven music streaming platform in a giant $1 billion deal.
The news, broken by Bloomberg, reveals that founders and investors of SoundCloud are looking into their options regarding SoundCloud’s future. Bloomberg’s sources, who asked to remain anonymous, say that one of these options could lead to a sale of SoundCloud.
According to the sources SoundCloud have been considering a sale for a while now, however talks are currently premature and they may ultimately decide against a sale. Apparently their target of $1 billion is too ambitious for potential buyers of the company, valued at roughly $700 million after a $70 million investment from Twitter in June.
The company has had a tough time monetising their service, which up until this year has been completely free. This wasn’t working as a sustainable business model however, as in 2014 when SoundCloud reported their accounts they showed $63.8 million in spending and only $19.7 million in generated revenues.
However SoundCloud launched their first paid service for listeners this year, SoundCloud Go, amongst pressure from labels. The paid service allows users to save tracks for offline play and gives them access to an expanded music catalog for $9.99 a month. With the launch of SoundCloud Go they also introduced ads on their free tier.
SoundCloud haven’t reported how successful SoundCloud Go has been and it’s expected that not many are paying for the service, but regardless with ad-supported streaming they’re at least earning more revenue than before. MIDIA Research analyst Mark Mulligan told Billboard in March this year that “it’s likely they’ll end up with low single digits.”
Currently there has been no official comment from SoundCloud or their investors on a sale so it’s not yet confirmed whether they’re considering a sale. Whether they are or not it’s still unlikely we will see a sale anytime soon, unless a buyer suddenly comes out of the shadows with a $1 billion cheque.