Looks like Spotify has backed out of talks to acquire SoundCloud

The digital music marriage that many wanted to happen isn’t happening after all. Spotify has given up on its latest effort to buy SoundCloud following months of talks between the two, according to a source at Spotify who is familiar with discussions.

The Financial Times reported in September that the duo were in “advanced talks” over an acquisition — things went pretty quiet after that, but we now understand that the deal died this past week. The source told TechCrunch that the company ultimately walked away because it feared that an acquisition could negatively impact its IPO preparation.

Spotify hasn’t officially said it will go public in 2017, but there has been plenty of speculation, including a funding round with incentives tied to a listing. The source said Spotify went cold on SoundCloud because “it doesn’t need an additional licensing headache in a potential IPO year.” That’s in reference to the complexity and financial cost that comes with negotiating with music labels, something that is hugely important to SoundCloud, which has a far larger catalog of tracks than other services because it caters to creatives, indies and remixers.