Reaction To The Deal & What's Next
The Echo Nest had received $23.6 million in funding since launching in 2008. Major investors include Commonwealth Capital Venture, Norwest, Martix and Jim Pallotta. Spotify has raised $538 million since its founding in 2006.
In addition to improved music data, yesterday's deal may be part of Spotify's preparation for an IPO, according to several sources.
Music industry consultant Mark Mulligan says the Spoitfy Echo Nest deal has established ideological fault lines between it and rival Beats Music. While Beats has put its faith in human curation Spotify has bet big on algorithms. It’s men against machines."
Different approaches to music discovery is one thing, but what if you're a company like Rdio, SiriusXM, BBC.com, MTV, Twitter, VEVO who use The Echo Nest to power some or all of your music offering. What if Spotify turns off its newly bought API? There is a big difference between the aspirations of a newly acquired company and the actual behavior of the buyer 12 months or so down the line," says Mulligan Indeed, a highly plausible scenario is that Spotify will eventually wind down the Echo Nest as a distinct entity, bringing all of its functionality behind the walls."