With IPO in Sight, Spotify Reportedly Ends Talks to Buy SoundCloud

Daniel Ek, Spotify Co-Founder/CEO
Toru Yamanaka/AFP/Getty Images

Daniel Ek, Spotify Co-Founder/CEO

Those rumored talks between Spotify and SoundCloud, regarding a possible buyout of the latter, have come to an end. That's according to TechCrunch, which cites a knowledgeable source at Spotify as indicating the company bailed on the idea because it didn't want to add any wrinkles to a potential IPO next year. Reps at Spotify and SoundCloud did not immediately return requests for comment.

The Financial Times reported in September that the two parties were in "advanced talks" about an acquisition. Sale talks are nothing new for SoundCloud, which reportedly put itself up on the market for $1 billion over the summer, just months after launching its on-demand streaming service Go.

According to the FT, Spotify has passed on acquiring SoundCloud on two previous occasions over the years. This time, however, Spotify reportedly got cold feet because it foresaw major headaches in the licensing process tied to SoundCloud's larger catalog of non-label tracks, including its cache of DJ remixes.

As previously reported, Spotify is under pressure to go public because in March it raised $1 billion in convertible debt, which can be exchanged to equity, under terms that grow less favorable as time passes. Spotify boasts 100 million-plus monthly users, with 40 million paid. Following close on its tail is Apple Music, which this week announced it has 20 million paid users. Amazon recently entered the on-demand streaming market, with Amazon Music Unlimited, and Pandora just (finally) unveiled its own all-in-one entry into the market.