A couple of years ago, companies like Spotify didn’t have to worry much in terms of competition. Sure they weren’t the first company to offer streaming services, but at that time there weren’t that many other services around as well.
However fast forward to today, we have new entrants from the likes of Apple in the form of iTunes Radio and Beats Music, just to name a few. What this means is that companies like Spotify can no longer sit back and rest on their laurels, which is why it is not surprising to learn that Spotify will be stepping up their game by acquiring The Echo Nest.
For those unfamiliar with The Echo Nest, the company calls themselves a “music intelligence company” where they attempt to help determine what kind of recommendations to make to music listeners during automatic streaming radio services. Basically they help music listeners discover new music.
This is especially important for streaming services since being able to recommend a good song is that keeps users coming back. After all why would listeners trust a service if the recommended songs are nothing like they would normally enjoy, right?
Now the good news for rival streaming services like Rdio, iHeartRadio, Deezer, and Rhapsody is that The Echo Nest’s API will remain free and open. Since these services rely on the company’s music recommendation services, it is good that Spotify will not be able to close it off, thus shutting out the competition in one fell swoop.
According to TechCrunch, the deal is reported to have been worth around $125 million, although Spotify has declined to comment on the figure. Will this acquisition help give Spotify that extra boost to stay ahead of the competition? We guess only time will tell.