I think this is a disaster. It's an awful, hideous, stupid (stupid for the wider industry) defensive acquisition on Spotify's part, paid for, presumably largely

I think this is a disaster. It's an awful, hideous, stupid (stupid for the wider industry) defensive acquisition on Spotify's part, paid for, presumably largely, by stock - I doubt they really have the cash to buy companies of the scale of The Echonest, who have taken close to $30m in investment. It destroys value in The Echonest - and every other non-consumer-facing music service out there. The beauty of The Echonest was that they DIDN'T sell to punters. And now, they've been bought in a deal paid for (assumption on my part) with made up value, based on an exit some time soon. It's basically a huge signal that Spotify is preparing for an IPO, which will help the major labels (considerable stock holders - and stake holders) realise a return on their early 'in-faith' investment in Spotify - which has been massively rewarded by unbelievable ($100m+) catalogue advances and equity. Streaming doesn't make money. It will - one day - but right now, there is no certainty that Spotify will come out on top, or even as a player in this space in five years, ten years, whatever. The whole streaming thing has been the biggest wholesale transfer of capital from investors to labels that the music industry has ever seen. Spotify is now "too big to fail". The advances the labels have taken, and the equity they have been given means that it is near impossible for them to let the streaming model of doing business fail. Even if it's currently cannibalistic of their other revenue, and even if there's a huge PR backlash from artists who don't understand that consumption models have changed. The Majors have been given enough actual cash that they can afford to stick it out. The Echonest is one of the most exciting companies - if not THE most exciting company - in the music space today. They've taken approaching $30m of funding, and I have no idea what Spotify had to pay for a company who are presumably fighting off acquisition on a day by day basis from people who want to become players in the music industry. There are about ten buyers I can imagine would have wanted to beat the highest bidder. Beats bought Topspin yesterday. A completely pointless acquisition, based, presumably, on Ian Rodgers' history with that company. Today, Spotify announce their acquisition of The Echonest. Neither company has ANYTHING exciting - on a day to day basis - to report (woo! new interface! woo! more shit headphones! woo! an artist partnership! which our competitors announce tomorrow! woo!) - and apart from the lacklustre launch of Beats earlier in the year, no one in that space has had anything exciting to report in ages. Streaming music is BORING. It's now pretty much just a commodity service, and it's becoming a very dull market, where the major players have nothing to distinguish themselves. The land grab is over, it's about who can sign what partnerships (people talked about Metcalfe's law with Whatsapp, but there's something similar at play here now - how can we partner with to bring massive numbers of consumers to our service? The landscape changes after Nokia and BOinc fucked that one up, but it won't be long before operators/ISPs try to get back in that game as partners rather than providers...) CURATION! DISCOVERY! ACCESS! It's boring as hell. How do you announce something and get some press attention? - buy something that IS exciting! We're looking at a race to the bottom. Spotify have two or three options with The Echonest; leave it as it is and let it power their competitors discovery engines; take it in house, shut it down for everyone else, and steal a brief competitive march on the other guys; absorb it, keep it as it is, but charge shitloads for the API to other services, generating a real (non-consumer) revenue stream for the company. Any of these, though, it's just sad. Music streaming is not innovation - it's reached the point that it is just another commoditised service now, and very soon we'll be at the stage that consumers just don't care where their music comes from; it will just be another bundled offering from infrastructure services (mobile, TV, ISP), or businesses like Netflix and Amazon, who are destroying conventional content payment models from the outside in. iTunes Radio, anyone? iOS carplay launched ONLY with audio partners, and iTunes want to steal that market 100%. Absolutely and without doubt, when Amazon Prime bundles in a streaming service, I will cancel my existing streaming provider contract - because, unlike Lovefilm vs Netflix, there is absolutely no catalogue differentiation. If you're streaming music, you stream ALL the music, not a bit of it - and that is the way services have been built, not least because of the way the whole digital supply chain in music works. You can't have a BIT of the catalogue - you have all of it. The labels (hello, TV & film studios - wake up!) saw this very early on (or, at least, very early on in this part of the emerging narrative) - the more people who supply their content, the better, and the more money they and the rights holders make. There are a few really exciting companies for whom The Echonest would have been a perfect target - people with brilliantly complementary data sets that could dovetail with their business. To sell out to an uncertain-futured company like Spotify is just sad. Sigh.