Spotify's acquisition of the Echo Nest (a leading music intelligence company, providing developers with the deepest understanding of music content and music fans) signals the growing importance of data in the music business as context becomes king in a world of virtually unlimited content.
The Swedish on-demand music streaming service has plenty of content, about 20 million tracks, and is adding 20,000 new tracks a day. And Spotify, which has raised $538 million in funding since its founding in 2006, according to CrunchBase, by purchasing Echo Nest (which itself raised more than $25 million in funding), puts investors on notice that the company is consolidating its data play while increasing assets and putting itself ahead of rivals in preparation for what many assume will be an eventual IPO.
But also implicit with the Echo Nest acquisition is that Spotify believes data can help grow its business by putting the right music in front of the right people at the right time.
"Music isn't just about providing a large catalog of songs, but about understanding the context in which people listen to music," Daniel Ek, Spotify's Chief Executive, said in an interview. "When you wake up, you will want to listen to different music than when you go running, for example. The way to understand what people will want to hear is with data."
Ek is not the only music executive who sees data as a key to unlocking new ways to deliver music with the eventual goal of creating new revenue streams through such things as better targetted advertising or personalized entertainment. Tribune Co. in December acquired Gracenote, Echo Nest's chief rival, for $170 million. Gracenote itself has forged partnership deals in recent months with Musicmetric nand Next Big Sound to augment its data offerings. Warner Music Group signed a deal to get exclusive data from Shazam, following a similar move by 300 Entertainment to access Twitter information.Spotify Acquires the Echo Nest
With data being a hot ticket, Spotify's acquisition of one of the biggest players on the field also serves to potentially augment the Swedish company's attractiveness in the eyes of potential investors in the event that Spotify goes public in an initial public offering.
Picked From Billboard