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Spotify Acquires The Echo Nest…

Screen shot 2014-03-06 at 9.49.16 AM

Some of The Echo Nest’s customers

Spotify’s relationship with musicians is a little rocky to say the least, despite their Spotify Artists efforts. The streaming service is bound to make artists and competing services even more uncomfortable after today’s announcement:

Spotify is acquiring The Echo Nest.

Yes, Spotify is the new owner of the data service that powers many of its competitors, including iHeartRadio, Nokia, Vevo, Rdio, Sirius XM, and Rhapsody.

According to Spotify, this acquisition “supports Spotify’s strategy to grow global music consumption and overall revenue back to the music industry by building the best user experience and music discovery engine for millions of global fans“… they have a long way to go on that.

Spotify has tried to make this whole thing sound less frightening by announcing that The Echo Nest will continue to operate from offices in Somerville, MA and San Francisco. The Echo Nest API will remain free and open to developers.

There’s no word on how much Spotify is paying for The Echo Nest, which has raised $23.6 in funding since opening in 2008. Spotify’s financials are constantly scrutinized, so maybe they didn’t want to fuel the fire by announcing the numbers.

We also don’t know what The Echo Nests’ investors have to say about this, we’ll have to wait and see if they are pleased with their return.

More as it develops.

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Comments (13)
  1. Casey

    This is an interesting development. I can’t imagine the companies who use the Echo Nest are overly thrilled with this. I know I wouldn’t want my top competitor to now be in control of the increasingly critical music intelligence platforms the Echo Nest offers. There are alternatives out there though. Maybe we will finally see some more diversity.


    Reply
  2. Iovine

    This is about Spotify either making itself look more diversified prior to it’s IPO, or to acquire the technology.

    If any of Echonest’s partners did not have the ability and engineering smarts to build recommendations and similar features, then they aren’t going to be around long anyway.

    If Spotify is doing this to look more diversified before their IPO, then they better close it fast because the Echonest clients are already planning to flee, if they haven’t had a contingency plan already.

    If Spotify is doing this to acquire the technology, and assume that the echonest paying customer base will leave (which is what will happen), then this belies what Spotify is really all about, which is not being a streaming music service, but a company that sells data of its customers and users. Takes their users and customer’s data, combines it with databases like Equifax, and sells things to its users and customers, targets political ads to them, sells them insurance, upsells concert tickets and merch.

    Either way, it’s smart, but the $62,000 question is how much longer will people stick with Spotify when there are much better options in the US (Rdio, Beats) and in the rest of the world, especially outside of Europe, the competition is fiercer.


    Reply
    1. Anonymous

      As long as Spotify controls social media and has people convinced they are the future of music, they will continue to be a dominant player. Those who lack attention in social media, like Rhapsody, seem to be quickly becoming a blur from the past. I have a feeling Rdio’s time to gain that attention may be running out.


      Reply
      1. FarePlay

        Make it so.

        You bring up an interesting point. Who said “streaming is the future of the record business”? Most likely a pr / marketing company, hired by the streaming industry.

        If streaming is the future, why do so few people want to pay for it?


        Reply
      2. spotifydoubter

        Rhapsody has sadly lost it’s grasp on the younger market and it’s product has never evolved. Rdio on the other hand is only 3 years old, has made the best web and mobile application, hands down…aside from being gorgeous. It’s available in almost as many places at Spotify. I haven’t seen any inkling of them going away. They had some layoffs and then they announced a new CEO and deals with Tesla and Chromecast and are Shazam’s global streaming partner. Before all that, Cumulus Radio invested in them and will make them their iheartradio.I just don’t see how this company just disappears or folds. It will be around in one form or another.

        If Spotify doesn’t continue to innovate and is just rushing to an IPO, they won’t last. Once they are public, forget about any real innovation. Beat, Rdio and Deezer launching in the US will look


        Reply
  3. FarePlay

    Apologies, I’m off topic. I like my song selections performed by humans. I’m just kind of funny that way.

    I’ll take spontaneity and inspiration over predictability every day. Seriously, do you want algorhytms shaping our musical tastes?


    Reply
    1. Some guy

      Human behavior and musical taste shapes the recommendation system, not the other way around.


      Reply
    2. curation

      I agree, if KCRW had a station on Rdio, I’d listen to that all day


      Reply
      1. Me

        KCRW has an app on Spotify.


        Reply
        1. curation

          I gladly pay for Rdio, don’t use spotify.


          Reply
  4. TuneHunter

    Probably good move. Will pay off big time if and when we switch to Discovery Moment Monetization.


    Reply
  5. G@

    Great move for the Echo Nest. They didn’t have anyone left to sell their services to and no other clear revenue sources.

    For Spotify, they get the best technology in the market for music discovery and also just F-ed all the competitors that use the Echo Nest. Switch to another source of recommendations / meta data isn’t easy and options are limited.

    I’m wondering if this is a Sean Parker move. It’s reminiscent of the way Facebook is doing acquisitions. Buy good companies but also spend whatever it takes to get them if it’s going to block the competition.


    Reply
    1. enrip


      Correct


      Only technology really, of any note. And other sources have said their data is messy. If you don’t think these other companies don’t have the ability to run their features without Echo Nest, you’re naive


      Sure, companies with $ and are market leaders do this all the time in most industries.


      Reply

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