Spotify acquires The Echo Nest, adds data-savviness to the bottom line

the echo nestSpotify, the Swedish cloud music streaming service, announced that it will be acquiring The Echo Nest, one of the industry’s top music intelligence platforms.  Financial aspects of the deal were not disclosed.

The acquisition supports Spotify’s goals to grow global music consumption and overall revenue back to its industry by focusing on the user experience as a music discovery engine for millions of global listeners.

“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. “At Spotify, we want to get people to listen to more music. We are hyper focused on creating the best user experience and it starts with building the best music intelligence platform on the planet. With The Echo Nest joining Spotify, we will make a big leap forward in our quest to play you the best music possible.”

Intelligence – music to Spotify’s ears


This deal will allow Spotify to leverage The Echo Nest’s in-depth musical understanding and tools for curation to drive music discovery.  Spotify’s been angling for data-driven recommendations since its inception, enhancing its platform over time to improve radio streaming, curations and discovery tools. It’s mobile user experience is particularly crucial to its global success, as it continues to take on Pandora in an effort to win over the entire user experience for music services.

According to The Street, Spotify’s latest buy could add to their bottom line:

“It changes the landscape in two major ways: 1) It make Spotify more viable because it provides the company with another revenue stream, one that could grow exponentially over the next few years and, speaking of that revenue stream, 2) It gives Spotify the opportunity to jump ahead of Pandora with respect to using music preference data to help (and make money from) record labels, bands and brands.”

This isn’t the first time Spotify’s acquired a data-happy music service. Last year it swallowed up one from its own ecosystem with the acquisition of Tunigo, an app that was powered by Spotify APIs.

The Echo Nest team will continue to operate in its Somerville, MA headquarters as well as in San Francisco.  The Echo Nest API will remain free and open to support its robust developer ecosystem.  The developer community is crucial to the success of both Spotify and The Echo Nest and will remain a priority for the combined companies.

In 2012, The Echo Nest announced a $17.3 million financing round led by Norwest Venture Partners with the participation of prior investors Matrix Partners, Commonwealth Capital Ventures, Fringe Partners, Jim Pallotta and board member Michael Brown.

image source: The Echo Nest