Spotify Paid $100 Million for The Echo Nest. 90% of That Was In Spotify Shares…

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We previously reported on Spotify’s acquisition of The Echo Nest, the company that powers many of Spotify’s competitors.  All signs point to an upcoming Spotify IPO, which The Echo Nest’s founders could cash in on based on the terms of this deal.

This acquisition will probably cause many of The Echo Nest’s customers to jump ship.  That is, if Spotify doesn’t cancel them outright to leave their competitors hanging.

On the price tag, TechCrunch is now reporting on the the amount of money involved, saying the information is from a “reliable source close to the deal” (Spotify gave no comment on the figures).

Spotify supposedly paid $100 million for The Echo Nest. 90 percent of that payment was in Spotify equity.

This all seems really good for Spotify, whose value is in the billions even though they’ve never turned a profit.  Data is money I guess.

The Echo Nest has raised close to $25 million, which raises the question of whether this is a good deal or a soggy piece of paper.  Either way, the data and technology the company has developed will be extremely valuable to Spotify.

6 Responses

  1. Anonymous

    Makes me wonder if someone else was looking at snatching up the Echo Nest and Spotify decided they couldn’t afford to let them go. Maybe Facebook or Amazon.

  2. Dry Roasted

    Echo Nest sounds a little desperate. Then again those shares could be like Pandora stock later.

    • TuneHunter

      Brilliant negotiation.
      Echonest has better technology than Shazam or Gracenote (sold for 170 million few weeks ago)

      Now they have to make next bold move or they will be out of cash.

      Spotify, Shazam, Gracenote and major artists should make a coalition and lobby new “fair use doctrine”.

      Both US and EU are percolating those issues at this moment.

      All of them will become billion dollar operations (actual sales) with unbelievable IPO numbers.

      It will help other media monetization and push Google GORILLA with YT baby to quarantine CAGE!

      It is OVERDUE!

      • TuneHunter

        Well this 90% is even more encouraging – they will not run out of cash in next few moths.

        Still, the most important part is the monetization of music.

        As is, Spotify and other streamers are in the era of mule and horse farming. At the same time YT got first steam engine converting all good staff to edible sawdust.

        What we really need is modern engine converting all streamers, Radio stations and interested websites to music merchants.

        Only possible result: 100 billion dollar industry before 2020.

  3. FarePlay

    Artificial intelligence. Now there’s a great way to destroy jobs, inspiration and spontaneity for predictability. i mean really, “Southbound” by Thin Lizzy into “Blond in The Bleachers” by Joni Mitchell? Never gonna happen from a software program.

    With all the great “former” program directors and dj’s out there, one would think this would be a great way, to make great music and create jobs for music people and not programmers.

    I read that these guys employ 70 “programmers”. Another example of tech draining thousands of jobs to make a few people rich………..