Spotify Backs Out of SoundCloud Deal

spotify logoIt seemed strangely appropriate when rumors started circulating earlier this year that media-streaming service Spotify was contemplating a buyout of music/podcast-hosting company SoundCloud. In podcasting terms, the two companies have shared similar profiles as being on the edges of the podcasting space, without ever completely taking the full plunge into the industry. The potential acquisition felt right somehow, if only because it might bring the newly formed SpotiCloud (Soundify? That surely must already be taken.) more into the center of the podcasting space.

But that chance has been dashed, as Spotify has reportedly walked away from the deal with SoundCloud:

The companies were in advanced talks on a deal in September, the FT reported, as Spotify looks to compete with Silicon Valley titans such as Apple and Amazon in the competitive streaming market.

However, the deal has fallen through because Spotify did not want to slow its path towards a flotation with the costs and licensing agreements needed to buy SoundCloud, according to someone familiar with the matter.

The fates of both Spotify and SoundCloud have seemed uncertain for awhile. Both companies have struggled to turn a profit. Spotify is headed for an initial public offering, and it’s possible that taking the company public may save it long enough for the company to build some true staying power. SoundCloud, on the other hand, has taken on a lot of debt thru multiple rounds of venture capital funding. After being passed over on two high profile buyouts (first Twitter and now Spotify), SoundCloud’s next move is anyones guess.