Spotify's Genius Plan To One-Up Rivals: Buy A Company They Use

03/06/2014 02:20 pm ET | Updated Mar 07, 2014
ASSOCIATED PRESS

Music service Spotify made an acquisition that could improve its product by potentially making its competitors worse.

The company announced Thursday that it acquired music intelligence platform The Echo Nest. If you haven't heard of The Echo Nest, you’ve probably seen what it can do: For years, it has been responsible for recommending tunes to Spotify users, as well as some of Spotify's competitors, such as Rdio, Vevo and Xbox Music.

"This deal will allow Spotify to leverage The Echo Nest’s in-depth musical understanding and tools for curation to drive music discovery for millions of users around the globe," reads a statement released by Spotify.

As Spotify expands its recommendation tools, many wonder what this will mean for the Spotify competitors currently using The Echo Nest as their music recommendation platform.

According to a statement from Spotify to The Verge, The Echo Nest’s existing contracts with rival music services will not be broken.

“In the few cases where The Echo Nest does work with direct competitors we will work with their teams to understand these relationships and determine the next business steps,” a company spokesperson told The Verge. “The bottom line is that The Echo Nest will meet all contractual obligations to all customers.”

It is unclear at this time if any of these contracts will be expanded following their completion. It's not unreasonable to suspect that Spotify wouldn't want to share its recent purchase with rivals for long, and that these competitors wouldn't want to pour their money directly back into Spotify.

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