Soundcloud has new potential buyer: Deezer

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Spotify already passed on buying SoundCloud.  But Deezer thinks this just might be a winning play.

SoundCloud is enormous.  And, enormously unprofitable.  The site has amassed 150 million songs on its streaming service, mostly from indie DJs, rappers, and other musicians.  Chance the Rapper has thanked the service for his success. However, the company has quickly bled through most of its cash.

Now, as it faces certain bankruptcy, a new buyer may have emerged to save the company: Deezer.

Last July, SoundCloud apparently mulled a $1 billion offer.   Yet, late last year, Spotify walked away from SoundCloud acquisitions talks.  Had they acquired the popular yet underperforming platform, it would’ve slowed down their IPO plans. Then, after posting a very poor financial report, co-founder and CEO Alexander Ljung admitted that the company may close its doors at the end of 2017.

That’s now less than 6 months away.

Following the dismal financial news, top executives quickly jumped ship and deserted the company.  Its COO and Finance Director saw that SoundCloud had no straightforward way to post a profit.  As a last-ditch effort to gain users, it slashed the price of its premium Go+ service to just $5.

Things continued to deteriorate.  Clearly in a dire situation, to obtain at least some cash, the company reportedly offered to sell itself for $250 million.  The company also reportedly then begged German investors for money.

In less than a year, SoundCloud had lost 75% of its valuation.

After Spotify walked away from acquisition talks, Google reportedly wanted to purchase the company for $500 million. Apple’s Jimmy Iovine had also reportedly expressed interesting in purchasing the company. Cupertino insiders quickly dismissed the rumors as “fake news.” Now, sources close to SoundCloud have told the New York Post that the company “is being eyed by a host of players.”

A ‘senior music source’ told the New York Post,