There are conflicting reports has to how likely a Spotify acquisition of SoundCloud is, but any deal would likely happen at a price far below the $700 million - $1.2 billion which investors have valued the company during previous funding rounds.
The valuation of SoundCloud fell from around $1.2 billion in December 2014 to $700 million when Twitter added $70 million in July of this year. Now with the music streamer for sale, and Spotify an interested buyer, acquisition talks are ranging as low as $350m to $500m, according to Financial Times.
SoundCloud funding to date totals $193.32 million in 6 rounds from 10 investors.
The reason for the falling valuation appears to be that user interest in SoundCloud is waning. At a time when streaming music is exploding, traffic to SoundCloud has fallen from 387 million to 353 million in the last 5 months.
Why Buy SoundCloud?
Unlike most must streamers, SoundCloud is part music service and part community, with 10 million musicians uploading and sharing new tracks. Add the lower valuation and you see why, more than a large but mostly unmonetized audience, may be why Spotify is seriously considering an acquisition.