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Wheelings & Dealings: Spotify Acquires The Echo Nest

TMCnet Feature

March 07, 2014

Wheelings & Dealings: Spotify Acquires The Echo Nest

By David Delony
Contributing Writer

The streaming music service Spotify (News - Alert) has announced that it has acquired The Echo Nest, a music intelligence services company.

“We've been fans of The Echo Nest for a really long time and honored to have their talented team join Spotify,” said Daniel Ek, Spotify founder and CEO. “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.”

“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,” said Jim Lucchese, CEO of The Echo Nest. “Joining forces with Spotify gives us the opportunity to continue doing so as part of the fastest-growing service in the world; we're thrilled to be part of a team equally as passionate about connecting more people with more music."

Spotify acquired the company to improve recommendations to its users. The economics of streaming music encourage companies to offer music completely customized to a user’s tastes.

A number of artists have complained about the low royalties Spotify pays out per stream. Former Talking Head David Byrne published an op-ed in The Guardian saying that Spotify could even kill creativity in music. Still, major artists keep adding their back catalogues to Spotify, including Pink Floyd and longtime digital holdouts Led Zeppelin.

Users who replay their favorite tunes over and over could generate a lot of money in the long haul. Offering music matched to a listener’s tastes could also mean a shift toward niche artists rather than trying to market blockbuster albums like Michael Jackson did in the ‘80s.

The Echo Nest, like its rival Pandora (News - Alert), tries to make recommendations based on “musical DNA.” The company will still operate under its own name, keeping its headquarters in San Francisco and keeping its API available.

Edited by Cassandra Tucker

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