[A2k] FT: Twitter weighs online music acquisitions

Thiru Balasubramaniam thiru at keionline.org
Wed Jun 4 21:23:20 PDT 2014


June 4, 2014 8:00 pm
Twitter weighs online music acquisitions

By Hannah Kuchler, Arash Massoudi and Tim Bradshaw

Twitter <http://markets.ft.com/tearsheets/performance.asp?s=us:TWTR> has
considered buying online music services including Soundcloud and Spotify in
recent months – a move that suggests it is willing to attempt its largest
acquisition to secure new sources of growth.

The online messaging platform has weighed up deals worth billions of
dollars as it seeks to add a music service to its offering, according to
three people familiar with the matter.

Twitter has been trying to boost the amount of time people spend on its
app, after coming under fire from Wall Street for slowing user growth. Its
shares have almost halved in value in the year to date, as investors worry
<http://www.ft.com/intl/cms/s/0/8d0e958e-cff9-11e3-9b2b-00144feabdc0.html> that
the social network would get stuck at just a fifth the size of Facebook

Twitter had experimented with its own music app, Twitter Music, but this
failed to catch on and was shut down in March. It had aimed to encourage
more conversation about music between Twitter users and to help them
discover new tracks. Twitter has since partnered with Billboard to chart
the most talked about bands on its network.

Its renewed interest in offering a music service comes as Apple acquires
Beats <http://www.ft.com/cms/s/0/4ebce752-e6a3-11e3-9a20-00144feabdc0.html>,
the headphones and content streaming company founded by Dr Dre and Jimmy

Ali Rowghani, Twitter’s chief operating officer, has been the driving force
behind its search for a music company, people familiar with the process
said. He recently entered talks with Soundcloud, the Berlin-based audio
site where musicians can upload their tracks, the people added.

Soundcloud was valued at $700m in a funding round in January. That was more
than double the $300m that Twitter spent on its largest acquisition so far,
the mobile advertising exchange MoPub
which it bought in September 2013. Soundcloud is backed by venture capital
firms including Union Square Ventures, Index Ventures and Kleiner Perkins.

Mr Rowghani also considered bids for Soundcloud’s rivals Spotify, the music
streaming service valued at $4bn at the end of last year, as well as Pandora
<http://markets.ft.com/tearsheets/performance.asp?s=us:P>, the New York
listed group that has a market capitalisation of almost $5bn. However,
people familiar with the process said Twitter did not engage in talks with
those companies.

Twitter’s plans to acquire Soundcloud were abandoned after internal
disagreements over the profitability of audio advertising and concerns over
copyright problems.

Twitter has been one of the most acquisitive technology companies
snapping up start-ups ranging from Vine, the six-second video clip service,
to analytics companies that can enhance its offering to advertisers. Most
recently, the company bought Gnip, a provider of social data, for an
undisclosed sum.

But analysts have noted that Twitter does not have large sums of cash with
which to buy a music service. It raised $2.1bn in its initial public
year and has secured a $1bn credit line, but remains unprofitable.

Twitter and Soundcloud declined to comment.

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