SoundCloud is close to a deal to sell stakes in the company to a pair of private equity firms, an investment that will help the beleaguered music-streaming service keep operating for the foreseeable future, according to Bloomberg, citing people familiar with the matter.
The two firms would be acquiring stakes via separate deals, said the people, who asked not to be identified. The names of the interested parties or the sizes of the transactions couldn’t immediately be obtained. Combined, the two private equity firms would own a majority of SoundCloud, the people said. While the talks are at an advanced stage, they could still fall apart.
The company has been scrambling to secure additional funding before it runs out of money. SoundCloud laid off 40 percent of its staff earlier this month, and shuttered offices in San Francisco and London. They lost 45.6 million euros in 2015 on sales of 21.1 million euros, according to a regulatory filing earlier this year.
Unlike rivals YouTube, Apple Music and Amazon Music, SoundCloud doesn’t have a parent company that can depend on sources of profit outside the music industry. And unlike Pandora, the online radio service, SoundCloud has never built much of an advertising business. SoundCloud introduced a subscription service in 2016 to convince some of its most ardent users to pay a monthly free. The service also mollified many music rights holders upset at how little money SoundCloud returned to artists.
SoundCloud has previously spoken with rival music services Spotify and Deezer about a potential sale, Bloomberg has reported, but couldn’t agree on a price. CEO Alex Ljung has rejected the prospect of selling the company, and would prefer to remain independent, the people said.
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