Twitter has confirmed that it has written off the $70 million investment that it made into flagging streaming platform SoundCloud. The social media firm pumped cash into the music service in 2016 after speculation that it might seek to buy the SoundCloud business outright.
Many people thought that an outright acquisition by a bigger tech firm was the best option for SoundCloud, which went through a very tricky period as it pivoted its business away from providing services to content creators to becoming a more conventional streaming service, with advertising and user subscriptions as its core revenue streams.
Twitter, Apple and Spotify were all linked to a SoundCloud purchase, but no deal ever came through. Then, last year, following rumours of imminent collapse, SoundCloud announced it had secured $169.5 million from two new backers. The new finance also saw a new management team put in place and a considerable write down of the firm’s valuation
This means that last week’s confirmation that Twitter was writing off its SoundCloud investment because the money is “not expected to be recoverable within a reasonable period of time” was not much of a surprise. But it’s a timely reminder of how risky the streaming music business remains, even for companies with substantial user-bases.[from http://ift.tt/2lvivLP]