Music subscription service Spotify have been in advanced talks about buying rival Soundcloud in a £535 million deal. This has come at a time where competition in the streaming music sector is increasing.

Soundcloud was launched in Sweden in 2007, and has gone on to attract 175 million users a month. An average of 12 hours of music is uploaded to the site by artists every minute. Twitter is the largest investor in the service. Based in Germany, SoundCloud built its business by allowing artists to upload their music and share it on social media and blogs. The service was last valued at $700 million.

According to BBC News, however, the firm is yet to make a profit as of yet. Meanwhile, Spotify remains the most-used streaming service, but has faced competition from Apple Music and Tidal recently. Spotify has 40 million subscribers, compared to 17 million for Apple Music. Spotify has, however, seen its revenues reach £1.5bn over the past year, but still has failed to make a profit. The platform offers music over the internet for nothing, with advertisements or ad-free for a fixed monthly rate.

The deal would add a large amount of music, including some exclusive content, which is what streaming services are after at the moment to gain new users, Apple Music for example has exclusive deals with Drake and Frank Ocean.

Analyst Mark Mulligan, founder of Midea Research has said in his blog

“Soundcloud has been shopping itself around for some time, while Spotify needs to continue outpacing Apple as it heads towards an initial public offering.”

SoundCloud would add mostly DJ sets and dance music to Spotify, which is what it’s tried to sell to potential subscribers with a SoundCloud Go service. The service remains one of the most recognised sites for new musicians to be able to get their music heard.