Google Rumored To Be Buying SoundCloud

It’s been no secret that SoundCloud has been up for sale for some time. Both Twitter and Spotify reportedly looked into acquiring the service and decided against it over the last few years. Now the latest rumor has Google acquiring SoundCloud for around $500 million, which is about half of what it was going for previously.

SoundCloud boasts around 175 million users around the world, and that appears to be the biggest selling point of the service. The licenses with the labels probably wouldn’t be transferrable, but Google has that taken care of anyway. Likewise, Google has the streaming infrastructure well in place, so there doesn’t seem to be a need there either. Execs or engineering talent could be the draw, perhaps, but there’s no clear superstar within SoundCloud that appears to warrant that kind of investment.

From the standpoint that Google’s Play Music streaming service is an also-ran in the streaming wars, an infusion of new users would be a boon, but remember that most of these users use SoundCloud to stream their own music and not listen to someone else’s.

There’s a hidden beneficiary in any acquisition, regardless if it’s Google or another service, and that’s the major labels. Why? They each own stock in SoundCloud and would stand to reap a cool $45 million between them from the sale if it stands at that price. Music Business Worldwide pegs Universal at 4% ownership in the company, Sony with 3% and Warner on somewhere between 1% and 2%. This is why the labels always push for equity in their licensing deals.

MBW also mentions that some large investment funds are now raising their ownership stakes in Pandora, with the thinking that it will also be acquired sometime this year.  If both companies are acquired, that would definitely change the streaming landscape, although probably not as much as you might think. The big money is still on Spotify and Apple Music until someone else steps up.