Conversations about acquisitions happen all the time, so maybe the story about Twitter and SoundCloud discussing a deal was more of an interesting leak than a close call. In the past two days, we’ve learned that there were conversations between the two, there was a deadline for exclusivity of talks, and that it passed with no deal.
Re/code, which first reported the conversations Monday, said Tuesday that Twitter walked away from the deal. But it was clear that SoundCloud’s price would be high, perhaps too high for Twitter to justify. And indeed, the Wall Street Journal reported that Twitter decided “the numbers didn’t add up,” and backed out.
Few know who leaked word of the conversations, but where will news of the no-deal lead? For starters, a lot more people are now acutely aware of what a good acquisition target SoundCloud would be for a larger media company, and the analogy of the Google/YouTube deal is fresh in people’s minds. People are guessing what the price would be -- $2 billion? More? And if there were indeed a period of exclusivity that Twitter enjoyed, it’s over now, so other bidders are now theoretically in the mix.
Berlin-based SoundCloud is a popular service that would have helped Twitter solve a growth problem. It could neatly add a music function to a social network, or augment any of numerous other media properties -- at least, ones that are able to part with a couple of billion dollars’ worth of cash and stock.
As for Twitter, the SoundCloud conversations are a reminder of the past failure of its Twitter Music service, and an indicator that it’s still trying to find a way to incorporate music as a key element of its platform. If its talks with SoundCloud were indeed serious, that’s a sign that it would rather buy than build something new -- and with a depressed stock price, it may have to shoot for a less expensive option in the near term.