Music consumers find great value in Spotify, which can quickly build online playlists based on an artist, style or user preferences, offering both a free, ad-supported membership and a paid service without ads. Songwriters and artists bemoan the much lower royalty rates offered for song plays, though many make their tracks available all the same, due to Spotify’s wide public acceptance.
Echo Nest is the Boston-based outfit who developed the software to sniff out songs to suggest, which is also utilized by competing services Rdio, iHeartRadio, Deezer and Rhapsody. According to information released earlier this month, the relationship with these other streaming services will not be changed by this acquisition, but it clearly gives Spotify a leg up on its rivals by controlling the company that developed the architecture.
Spotify was initially created by a Swedish team in 2008, and is available in 55 global markets. They claim a payout to artists and copyright holders at more than a billion dollars to date. Echo Nest was started by a small group of post-grauate students at MIT in 2005, and they now have more 35 million songs in their reference database.