Should Spotify buy Soundcloud?

The two parties are in 'advance talks'...

Should Spotify buy Soundcloud?

Edward Smith / EMPICS Entertainment

It has been reported overnight that Spotify is in advance talks to buy Soundcloud.

The Financial Times says that these talks have been on-going and it is unclear what price the company would sell for.

While Spotify’s streaming service offers music from record labels, Soundcloud is a hotbed of unsigned music, DJ remixes, and podcasts.

It also features a extremely attractive user interface and a distinctive media player which shows audio's sound-wave as it plays.

The Berlin based start-up raised $100m in June and is valued at more than €620m - that round of funding included an investment from Twitter.

Twitter was also linked to a potential deal to buy the company two years ago.

The deal would add to Spotify’s arsenal as it attempts to stay ahead of its rivals in the increasingly competitive music streaming market.

Latest user numbers show that the Swedish company has 40 million paying subscribers while Apple Music has attracted 17 million.

In many ways the deal makes a lot of sense, there's limited crossover in content across the two services and they are targeting the same audience.

Soundcloud's never made a profit - it has launched a premium service for €9.99 which allows users to download content. It also has a limited ad business - pooling resources and expertise Spotify could help the firm to create revenue, drawing from its 175 million monthly listeners.

Spotify would also benefit by swallowing up a potential competitor, bulking up its offering if (as expected) it goes public in 2017.

It could also increase the company's clout as if continues to renegotiate its terms with key music publishers.