Twitter considers buying online music service Spotify

Move suggests online giant is willing to attempt large acquisitions to secure new sources of growth

Twitter 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 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, the headphones and content streaming company founded by Dr Dre and Jimmy Iovine.

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 $700 million in a funding round in January. That was more than double the $300 million 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 $4 billion at the end of last year, as well as Pandora, the New York listed group that has a market capitalisation of almost $5 billion. 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 $2.1 billion in its initial public offering last year and has secured a $1 billion credit line, but remains unprofitable.

Twitter and Soundcloud declined to comment.

(Copyright The Financial Times Limited 2014)