Reasons for Twitter Inc (TWTR) Acquiring SoundCloud

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Twitter Inc (NYSE:TWTR) is looking into pairing with a music startup and it has its eyes specifically on Soundcloud, a German startup.

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Alexander Ljung, CEO of Soundcloud, said in an interview with Bloomberg, last year, regarding how it fits into the broader media industry, that many interesting things are being done with regards to media online, YouTube on the video side and Soundcloud on the audio side. He mentioned that these were different from applications done by others. He also added statistics, which reinforced the fact that Soundcloud had a solid foothold in the industry.

“When I look at the broader scope of what is happening, with media online, I think the interesting things are sort of what YouTube is doing on the video side and what Soundcloud is doing on the audio side, which is dramatically different from these existing applications that others do and we have over 12 hours of sounds uploaded every single minute. There is over 200 million people interacting with it every month, and it is something that really makes use of the Internet” Ljung stated.

In a report, Sarah Frier of Bloomberg News, revealed a possible reason behind Twitter Inc (NYSE:TWTR)’s decision to seal a music deal with Soundcloud is revealed. Frier suggests that Twitter is looking for anyone that could help them take a foot in the music industry. Twitter’s music app flopped last year. But when Soundcloud has more users than Twitter, then why would it sell itself? For starters, Twitter Inc (NYSE:TWTR) has capital, since it recently conducted its IPO. And investing it in Soundcloud could help it in the music arena, having been successful with online TV and other types of celebrities. Just like Apple Inc has iTunes and YouTube is being propelled by music, Twitter needs Soundcloud. When questioned if Twitter Inc (NYSE:TWTR) wanted to do it, she replied by saying that it was too early to say as no numbers have been released. But it could be assumed that the rate would be around $1 billion considering how Soundcloud has a solid base in the industry. As for user growth, Soundcloud would help Twitter Inc greatly, as Soundcloud is more of a conventional streaming service which everyone would use while Twitter Inc is not so user friendly.

The full video is available below:

In conclusion, this deal would help Twitter Inc (NYSE:TWTR) gain a wider user base and would bring it at par with its competitors.

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