Twitter Invests In SoundCloud, Bringing Hope For Two Struggling Services

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Twitter Invests In SoundCloud, Bringing Hope For Two Struggling Services by Mikey Tom, PitchBook

Twitter has reportedly contributed about $70 million to a funding that will total close to $100 million for music streaming service SoundCloud. It’s said the round values the company at around $700 million, which represents a modest gain from its last private financing in 2014 at a $564 million valuation.

This deal may bring some hope for two companies that have been struggling to find their way. Twitter has been plagued by management changes, most notably part-time CEO Jack Dorsey replacing Dick Costolo in June of last year, as well as alarmingly stagnant user growth. SoundCloud, on the other hand, has been going through the pains of transitioning from a free service to a revenue-generating business, via advertisements and a new premium product. While it’s a bit early to pass judgment on the premium service, as it was launched less than three months ago, SoundCloud has no shortage of competitors in the space. With companies like Apple, Spotify, and yes, even Tidal, all vying for the same market, SoundCloud will really have to differentiate itself—and fast. Reports circulated earlier this year that the company was hemorrhaging money, to the tune of €39 million in 2014 alone.

All that to say, this investment, and supposed partnership to come with it, could help get these two companies get back on track. The very premise and interface of each service are starkly similar, allowing users to build profiles, “like” and repost their favorite content, as well as follow trends, influencers and friends. It’s almost comical how alike they are, and this should be able to be leveraged by either company for business gains—something that I’m sure Twitter has been thinking about for a while. A couple years ago the social network made an attempt to acquire SoundCloud, although the deal eventually fell through.

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Preview of SoundCloud’s PitchBook Profile