Spotify is acquiring The Echo Nest, the music recommendation company that's been powering a number of today's biggest radio apps. While you might not be familiar with its name, there's a good chance that you've listened to music that it suggested for you: its been a big part of Spotify, Rdio, Vevo, Xbox Music, and a number of other major apps for a few years now. The Echo Nest's recommendation services will still remain free and open to all noncommercial developers, but Spotify isn't saying exactly exactly what the purchase will mean for its commercial competitors — and that should give them good cause to worry.
"The Echo Nest will meet all contractual obligations."
In an email to The Verge, Spotify says that all of The Echo Nest's existing business contracts will be fulfilled, meaning its competitors' music recommendations are safe for the short term. Whether competitors will be able to extend their contracts with The Echo Nest or begin new ones now that it's under Spotify is another question. "In the few cases where The Echo Nest does work with direct competitors we will work with their team to understand these relationships and determine the next business steps," a Spotify representative says. "The bottom line is that The Echo Nest will meet all contractual obligations to all customers."
Should Spotify ultimately choose to lock The Echo Nest's recommendations away from commercial competitors, it could mean the end to great music recommendations from a number of services that don't have the resources or data sets to build their own. To that end, it's an aggressive purchase by Spotify that should help to keep it on top. And it may only be the first: Spotify recently raised a large round of funding — reportedly $250 million — which should give it plenty to space to make strategic acquisitions like this.
Today's acquisition may spell particularly bad news for Rdio, which has been struggling with layoffs and has already had to close one major product to focus on its core. While Rdio hasn't always relied on The Echo Nest, it's been using it for several years and would likely have to spend more resources than it would like to right now toward catching up on recommendations, should it be cut off by Spotify.
For its part, Rdio downplays its reliance on The Echo Nest. "[The Echo Nest API] is just one of the many tools we use to create the best personalized listening experience for people on Rdio," the company says in a statement to The Verge. For now, it isn't clear how much it should be worrying: Spotify tells us that it sees The Echo Nest's API and ecosystem as "really important," and it seems that it's is still determining how best to handle them going forward.