What’s behind Spotify’s brace of acquisitions?
The streaming giant has acquired Soundwave and Cord Project in its ongoing search for tech talent
In the last few weeks, Spotify have been hiring folks left, right and centre. Last month, George Ergatoudis left his gig as head of music at BBC Radio 1 and 1Xtra to become Spotify’s head of content programming for the UK. Experienced record label exec Pat Shah upped sticks from Universal Music to become the streaming service’s head of original content licensing.
Yesterday saw the announcement that Spotify were further flexing their muscles in the acquisition market with the takeover of Irish music discovery app Soundwave and New York-based messaging app Cord Project. It’s understood that Spotify were not exactly flaithulach with the cash when it came to these deals, but the initial investors in both were probably more than happy with the exits.
So, what’s in it for Spotify in taking over these companies? As with the Ergatoudis and Shah hires, it’s as much about the talent as the actual products. TechChrunch speculates that “what Soundwave and Cord Project will bring to the company are teams that have been focused on how to develop innovative ways to insert communications into platforms that may not be focused solely on that purpose.” Soundwave’s music discovery chops make complete sense in terms of where Spotify are at in that regard, while Cord Project is a more interesting move which opens new possibilities for the streaming service.
But while there may be IP in both that Spotify will be happy to have and exploit, the real advantage is that they’ve now got some more smart people inside their tent to help them continue to build and expand their platform and beat the competition. Look at how Spotify have used the Echo Nest step-up in the two years since that acquisition to put discovery front and centre of their activities and you’ve a clue as to what’s ahead for Soundwave and Cord Project.
Spotify are not the only streaming service on a talent binge. While there was a lot of noise about Zane Lowe moving from BBC Radio One to Apple Music, he wasn’t the only one who moved in that direction. Five producers also walked, a serious loss of talent for the British broadcaster and something which Rhys Hughes, head of programmes at BBC Radio One talked about last week during a presentation at Eurosonic (he was replacing Ergatoudis who was originally confirmed for the panel). Radio is under pressure from many sources, from distractions caused by the attention economy to a reduction in funding, and streaming is one of those things which is also hitting the sector. Hughes pointed out that streaming is the 14th most popular activity for people with smartphones with radio coming in at number 33, just behind banking at number 32.
In terms of talent, Spotify, then, have to keep up with Apple Music, just as Apple Music have to keep up with Spotify. There are others with a dog in this fight too – Deezer announced yesterday that they’ve raised €100 million in a new fundraising round after pulling an IPO a few months ago – and 2016 will be an interesting one in the streaming market as all involved seek to increase their reach. Between the three of them, they claim around 36 million paying subscribers – Tidal would add another million to that number – which is a drop in the ocean in terms of what can be achieved.
Hence, the move by the big players to bring in new, fresh talent to help in the move to introduce new products, create better user experiences and come up more reasons for people to pay a monthly subscription fee to keep the ship afloat. There are other big beasts who could move into the music sphere – will 2016 be the year that Facebook finally do something around music? – so there’s an urgency to recruit bright minds and get on with expanding the streaming platforms and add more credit cards to the bankroll. Those with sharp music tech ideas kicking around at the moment will be paying close attention to any approaches from the streaming world.