When Spotify bought out The Echo Nest in March last year, a pricetag was quickly put on the deal by US sources: $100m, of which 90% was given to the music intelligence firm’s owners in Spotify shares.
Now we know that was a bit of a dramatic over-estimation – although it was half-right.
Information filed by Spotify in Luxembourg obtained by MBW shows that, in fact, Spotify paid a total consideration of €49.7m for The Echo Nest (around $58m).
The purchase consisted of €5.1m in cash, with 57,929 shares in Spotify plus ‘pre-combination share-based payment awards’ valued at €4.7m.
The acquisition price of The Echo Nest looks something of a bargain compared to the sale of rival Gracenote to Chicago-based broadcaster Tribune for $170m in 2013.
Meanwhile, Apple’s purchase of another rival, British company Semetric earlier this year is believed to have cost around $50m (€45m) – a pricetag in the same ballpark as The Echo Nest.
Whatever Apple is planning to do with Semetric’s assets is likely to be revealed on June 8, when the Cupertino giant is expected to take the wraps off its much-anticipated new streaming music service.
Spotify’s acquisition of The Echo Nest created €40.3m in goodwill, which Spotify was happy to accept due to the firm’s workforce and ‘the expectation that the acquisition will create synergies that will provide future value’.
“We’ve been fans of The Echo Nest for a really long time and honoured to have their talented team join Spotify,” said Daniel Ek, Founder and CEO, Spotify, after the deal was closed last year.
“At Spotify, we want to get people to listen to more music. We are hyper focused on creating the best user experience and it starts with building the best music intelligence platform on the planet.
“With The Echo Nest joining Spotify, we will make a big leap forward in our quest to play you the best music possible.”Music Business Worldwide