Twitter Inc (TWTR) Walks Away from SoundCloud Acquisition Talks


Twitter Inc (NYSE:TWTR) considered the possibility of acquiring SoundCloud, a music streaming startup based in Berlin, however the popular microblogging company walked away from the negotiation, according to the Wall Street Journal based on information from a source familiar with the situation.

According to the source, Twitter Inc (NYSELTWTR) allowed the deadline for exclusivity on the acquisition talks to expire without reaching an agreement because “the numbers didn’t add up.”  The person did not clarify which party initiated the negotiation, and how much was involved.

SoundCloud is a free website that allows people to listen, record music and audio files they captured or created and share it to different social network platforms including Facebook Inc (NASDAQ:FB), Twitter Inc (NYSE:TWTR), Tumblr and Pinterest. The startup also offers a subscription-based account for musicians to promote their own music.

The Berlin-based music streaming startup has 250 million monthly users as of October last year. It was able to raised $60 million funding earlier this year. SoundCloud has a valuation of $700 million.

Christian Nagel of Earlybird, a venture capital firm in Germany opined that the report about Twitter Inc (NYSE:TWTR) considered purchasing SoundCloud at its current valuation is good for startups in the country. He added, “But it would also be unfortunate for one of the German startups with the best chance of long-term value to get swallowed up this fast.”

The Wall Street Journal emphasized that SoundCloud’s lack of licensing agreements with music labels to be able to stream copyrighted materials is a concern. Beyoncé and Nine Inch Nails introduced exclusive content on its site, but majority of the music streaming on its service come from amateur musicians.

Separately, Bloomberg reported that Twitter Inc (NYSE:TWTR) is also discussing partnership agreements with other music startups including SoundHound, a sound recognition and search technology firm based in Santa Clara California.

SoundHound’s mobile app has 200 million users and it makes money through affiliate fees from companies including Apple Inc. (NASDAQ:AAPL) and, Inc. (NASDAQ:AMZN). It also generates revenue from mobile advertising and technology licensing.

Katie McMahon, vice president of sales and marketing at SoundHound said Twitter Inc (NYSE:TWTR) discussed using the startup’s technology and data to boost user engagement. She said, “As a leader in mobile, we’re viewed as a very interesting source that can show insights into what may be happening.” McMahon added, SoundHound is “monetizing its user experience in a way that keeps users engaged.”

Twitter Inc (NYSE:TWTR) also held informal discussions with Shazam Entertainment, an audio recognition service firm based in London regarding potential partnerships around television viewing, according to person familiar with the issue.