Spotify announced today that it has acquired the Echo Nest. The deal will allow the streaming platform to utilize the music intelligence platform's widely-used algorithms to enhance user experience and music discovery for Spotify's millions of users.
The terms of the deal have not been disclosed, but in an official blog post the Echo Nest founders revealed that they had been in talks with Spotify for some time. According to CrunchBase the Echo Nest has raised some $25.6 million dollars since it was founded in 2005.
“We've been fans of The Echo Nest for a really long time and honoured to have their talented team join Spotify,” said Daniel Ek, Founder and CEO, Spotify in a statement. “At Spotify, we want to get people to listen to more music. With The Echo Nest joining Spotify, we will make a big leap forward in our quest to play you the best music possible.”
It is unclear what Spotify's acquisition of the Echo Nest will mean for the company's future relationship with their other customers and Spotify's competing music services such as Rdio, iHeartRadio, SiriusXM, Vevo and MTV, all of which are clients of the Echo Nest (as well non-music entities such as Foursquare, Twitter, and Yahoo! and device manufacturers like Nokia, and major brands like Coca-Cola, Intel Microsoft, and Reebok). It is likely these companies will seek other options rather than contributing to the coffers of a competitor while also allowing Spotify access to their backend data.
Some are already speculating this acquisition is strategic step for Spotify which is reportedly setting sights on an IPO in the next 12 to 18 months. The move could be seen by potential investors as a solid 'big data' play that reinforces the perception that Spotify is the premiere music streaming service which now owns one of the preeminent backend data providers for music services.
This development also follows the December announcement that multimedia conglomerate Tribune had acquired Gracenote, another backend digital data provider for music services like Rhapsody and XBox Music, from Sony. Yesterday, Gracenote announced a deal with Musicmetric to incorporate social media sentiment and Bittorrent data into their algorithms. Gracenote will also incorporate data from Next Big Sound.
In a similar scenario this week, Beats, which owns music streaming company Beats Music, purchased Topspin Media (whose former CEO Ian Rogers is now the CEO of Beats Music) and which currently provides artist services to competitor Spotify among other platforms.
“Since founding the Echo Nest, Brian Whitman and Tristan Jehan have created a company completely and beautifully obsessed with understanding the world of music to help fans discover more music," Jim Lucchese, CEO of The Echo Nest stated. "Joining forces with Spotify gives us the opportunity to continue doing so as part of the fastest-growing service in the world."