Why Spotify buying SoundCloud makes music sense

Gigi Douban Sep 29, 2016
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Jason Davis/Getty Images

Why Spotify buying SoundCloud makes music sense

Gigi Douban Sep 29, 2016
Jason Davis/Getty Images
HTML EMBED:
COPY

Spotify is negotiating a deal to acquire SoundCloud. With Apple, Google, and Amazon each getting a foothold into the music streaming space, it’s getting really crowded, and Spotify, which has about 40 million paid subscribers, is looking to SoundCloud to grow its customer base.

But the two streaming services are very different. If Spotify is about royalties and record labels, SoundCloud is its hip do-it-yourself cousin. It’s popular with DJ’s and artists like Kiran Gandhi, who’s been a drummer since she was 11. Recently, she posted this percussion edit of a piece called “African Flute by DJ Obeyah.” 

As an artist, she says, she loves the control SoundCloud gives her. She picks the album art, she uploads her tracks, she can take something down in a few days if she gets sick of it. 

“You can connect with other artists, you can message them, people can message you to book you for gigs directly,” she said. 

 There’s one big downside: Spotify pays, SoundCloud doesn’t. But that might change if Spotify takes on SoundCloud and its 175 million monthly users. 

“Growth and scale seem to be what they’re doubling down on,” Casey Rae, media professor at Georgetown University said.

He said part of growth is users sharing and commenting on tracks. On SoundCloud, users can click on audio and comment at different spots. “Ooh, I like this break, ooh, I like this chorus… oh, I hate this part,” he said. “And I think that’s kind of cool.” 

Whereas with Spotify, there was always that guy who shared every song he was listening to on Facebook. Ryan Martin, senior analyst at ABI Research, said another thing Spotify wants? Podcasts.  

“SoundCloud has that. Spotify doesn’t,” Martin said. “At least not to the same extent.”

 And for Spotify, that could mean even more subscribers and revenue. 

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