Twitter (News - Alert) announced earlier this week that is has invested 70 million dollars in SoundCloud, the music streaming service, through its Twitter Ventures investing arm. Based on a recent valuation that placed SoundCloud’s worth at 700 million dollars, Twitter’s purchase is worth ten percent.
This is not the first time that these two entities have been involved in business talks. Twitter gave serious thought two years ago to acquiring SoundCloud in its entirety, when the service was still in its fledgling stages. However, the deal never came to fruition. Now that SoundCloud has showed continued growth and popularity, however, Twitter has deemed it worthy of substantial investment and perhaps a strategic partnership.
“Earlier this year we made an investment in SoundCloud through Twitter Ventures to help support some of our efforts with creators,” Twitter CEO Jack Dorsey said. “They’ve been great partners of ours over the years and their community-supported approach mirrors ours in many ways.”
SoundCloud hosts a wealth of user-generated songs, podcasts, audiobooks, etc. Much like Twitter, it relies on its own users to generate content; they are merely the repository for that content and provide a means to view it. As SoundCloud said in a statement, “Both companies facilitate and inspire contemporary culture to happen in real time.”
It seems that SoundCloud sees much of the benefit in this partnership with Twitter in the rollout of their new subscription service that is meant to serve as the company’s main revenue stream. “This investment will enable SoundCloud to remain focused on building value for creators and listeners alike, and to continue the global rollout of many company initiatives such as our recently launched subscription service, SoundCloud Go.”
A partnership between Twitter and SoundCloud would be a mutually beneficial one, as it gives Twitter access to even more shareable and easily engage-able content while giving SoundCloud a better vehicle for promoting said content.