Embattled music streamer SoundCloud is in discussions with Alphabet's (GOOGL - Get Report) Google unit to be acquired by the tech giant for close to $500 million, sources told Music Business Worldwide.

The news comes after another potential deal for the Berlin company imploded last month, this time with fellow music streaming company Spotify. SoundCloud had hoped to sell to Spotify for around $1 billion, according to MBW. Spotify apparently walked away from the deal table in December, however, due to potential complications with an anticipated initial public offering this year.

TechCrunch sources said at the time that Spotify felt that it "doesn't need an additional licensing headache in a potential IPO." If Spotify explored a deal with SoundCloud, the company would need to battle with music labels over SoundCloud's indie-focused track catalog, incurring additional costs.

Spotify has yet to file IPO paperwork with the Securities and Exchange Commission.

Reports of a new potential suitor are good news for SoundCloud on the heels of Spotify's snub.

Additionally, the rumors come at a time when the company has been steadily bleeding cash in recent years. SoundCloud announced in early 2016 that it lost a whopping $56.4 million in 2014. This number pushed SoundCloud's financial auditor, KPMG, to say it has "significant doubt on the company's ability to continue as a going concern."

"The company and group may be unable to realize [their] assets and discharge [their] liabilities in the normal course of business," the firm added.

Since then, SoundCloud has raised another round of investment. After turning away from purchasing the company in 2014, social media site Twitter (TWTR - Get Report)  invested $70 million in SoundCloud in July, Recode said. The company is now valued at around $700 million.

Despite the additional backing, the company remains in a tough spot as it faces an increasing number of competitors in the streaming space.

Alongside former suitor Spotify, Pandora (P) is also a big name in the streaming market. Apple (AAPL - Get Report) has its Apple Music service, unveiled in 2015; Amazon (AMZN - Get Report) launched Amazon Music Unlimited in October; and SoundCloud's new rumored buyer Alphabet is already in the ring with its Google Play Music service.

Joining Google could give SoundCloud the kind of clout and financial backing the company needs as competition heats up. Alphabet and SoundCloud did not immediately respond to requests for comment.

Given the crowded streaming landscape, speculation of M&A is rampant for 2017.

Pandora reportedly has been looking to sell itself and has focused its efforts on radio company Sirius XM (SIRI - Get Report) , controlled by Liberty Media (LMCA) . Although Sirius attempted to buy Pandora for $15 per share, or about $3.4 billion, in early 2016 and later was rejected, sources told CNBC last month that Sirius is expected to re-enter talks to acquire the Oakland, Calif., company.

TheStreet included the deal in its recent media predictions for this year. BTIG analyst Rich Greenfield also noted the logic to the deal in a recent note, pointing as well to potential interest in Spotify for Apple, Comcast (CMCSA - Get Report) or AT&T (T - Get Report) .

With SoundCloud and Pandora looking for bidders and Spotify primping for an IPO, 2017 is shaping up to be a transformative year in the digital streaming space.

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