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May 20, 2014

Twitter said to be discussing music deals including SoundCloud

SAN FRANCISCO — Twitter is in early discussions to acquire or partner with music-related startups to rev up user growth, according to people with knowledge of the talks.

One company Twitter is considering buying is SoundCloud, a Berlin-based startup that lets people share music, according to one of the people who asked not to be named because the information is private. Talks could still fall apart, the person said. Twitter's business development team has also been discussing partnerships with companies including SoundHound, a Santa Clara, California-based application for recognizing music that is playing at the moment.

Twitter, which people use as a forum to talk about live events and entertainment programming, is holding talks with music-related companies as it works to attract a broader audience. The San Francisco-based microblogging company has struggled to woo new users to its service as quickly as it once did. Membership in the first quarter stood at 255 million, up 25 percent from a year earlier and down from 30 percent growth in the prior period.

Will Stickney, a spokesman for Twitter, declined to comment Monday. Kristina Weise, a spokeswoman for SoundCloud, didn't return a call for comment.

Twitter's discussions with SoundCloud were reported Monday by technology blog Re/code.

Other consumer technology companies have built themselves up atop the music industry, including Apple, which embarked on a growth streak last decade that was fueled by its iTunes music store and iPod device. More recently, Apple has been in discussions to acquire Beats Electronics, a music-streaming service and headphone maker, for $3.2 billion. Facebook Inc. has integrated Spotify's music-streaming service into its social network to boost sharing, while Google's YouTube video site has helped turn musical nobodies into stars.

Twitter previously tried to build an app, called Twitter Music, to help people find songs based on the buzz on the platform. The app was shut down earlier this year after flopping with consumers.

Since then, Twitter has been signing partnerships that get it closer to the music industry, including a deal with Billboard earlier this year to display charts on the most talked-about songs. The company has also helped train celebrities in best practices on the network, with singer Justin Bieber one of its most-followed users.

SoundHound has attracted more than 200 million users to its mobile app that recognizes songs and lets consumers search for and buy music based on what they're hearing. The company makes money through affiliate fees with companies including Apple and Amazon.com Inc., mobile advertising and technology licensing.

Twitter has held talks with SoundHound about using its technology and data to boost user engagement, said Katie McMahon, vice president of sales and marketing at the startup.

"As a leader in mobile, we're viewed as a very interesting source that can show insights into what may be happening," McMahon said. SoundHound is "monetizing its user experience in a way that keeps users engaged."

As part of the effort to add to its entertainment offerings, Twitter has also had informal talks with Shazam Entertainment Ltd., the London-based audio-recognition service, about ways the two companies could work together around television viewing, said a person with knowledge of the matter.

Sarah Hudson, a spokeswoman for Shazam, declined to comment.

SoundCloud lets people record, upload and share audio they create and has become popular for listening to DJ sets and mixes from electronic artists. The company charges for premium subscriptions and has more than 250 million listeners, Chief Executive Officer Alex Ljung said at the TechCrunch Disrupt conference in October. SoundCloud is backed by venture capital firms including Institutional Venture Partners and Kleiner Perkins Caufield & Byers.

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