Spotify is in talks to acquire SoundCloud, according to a report in the Financial Times. The music streaming service and the creative communiy are at an “advanced” stage of negotiation but a deal has not yet been finalized.
SoundCloud raised $100 million in June. It is valued at approximately $700 million. However, it is not profitable.
Spotify has more than 40 million paying users—but it, too, is not profitable. Still, the two companies are among Europe’s hottest tech startups right now.
This is not the first time Spotify has considered buying SoundCloud—talks started last year but quickly fell through over prices. But now as Spotify prepares for an IPO next year, the company wants to diversity its content catalog.
With titans like Apple and Google deep competing in the music streaming space, consolidation seems to be a strategy of survival. Pandora last year acquired Rdio, for example, and while Spotify remains larger than Apple Music by subscribers, its balance sheet keeps it vulnerable.