After two years of negotiations, SoundCloud and Twitter have finally become one. In 2014, Twitter began weighing the pros and cons of buying SoundCloud, but because of its financial situation and lack of licensing deals with record companies, Twitter quickly backed out. Since then, SoundCloud has struck a wealth of deals with new publishers and record companies, legitimizing it as a conventional music business.
In 2008, SoundCloud became a much-loved business for both musicians and fans, with a generous 175 million users worldwide. However, major record labels were enraged because of the use of unlicensed content, which sparked copyright liability. This only made the money issues for the hit company worse. With $77 million in debt last year alone, the company stated it would need to raise a substantial amount of money to stay afloat.
This is where Twitter jumped on the sinking ship and pulled it back to shore. Twitter invested a whopping $70 million in the streaming music service, which only makes sense given their common ground in streaming, and the partnership that would bring Twitter new users and SoundCloud financial assistance.
Jack Dorsey, the chief executive for Twitter, confirmed the investment in a statement on Tuesday. “Earlier this year, we made an investment in SoundCloud through Twitter Ventures to help support some of our efforts with creators. They’ve been great partners of ours over the years, and their community-supported approach mirrors ours in many ways.” Though he did not specify the amount, the figure was confirmed by an individual who had been briefed on the deal.