From Shazam to Pandora: 2018 Sees Fewer Acquisitions in Numbers, but High in Impact
The music streaming giants were cautious buyers in 2018, making few acquisitions compared to the buying sprees of past years. Even so, too much happened to cover in one year-in-review post (or podcast episode).
Spotify, which went public on April 3 via direct listing (rather than a classic IPO), acquired Loudr later that month. Billing themselves as “Big Data for Music Rights,” Loudr offered licensing and distribution products that allowed content creators, aggregators, and digital music services to identify, track, and pay music publishers. Loudr, founded in 2013, had 9 employees at the time of the sale. The sale price and terms of deal have not been revealed. Spotify announced no further acquisitions during the remainder of the year, though they did make a controversial, strategic investment in Distrokid. In contrast, in 2017 Spotify acquired Soundtrap, niland, Mediachain, and MightyTV.
In late May, Pandora completed the acquisition of AdsWizz, their first big buy since the purchase of Rdio and Ticketfly in 2015. AdsWizz, founded in 2008, developed a technology platform that provides ad services to music DSPs, podcasts, and broadcasting groups. AdsWizz made a deal to operate as a standalone subsidiary of Pandora and fold their 140 employees into Pandora’s staff. Before the sale, their international slate of clients included Cox Media Group, iHeartRadio, Deezer, and Spotify. Spotify responded to rival Pandora taking the reins by leaving AdsWizz later in the summer in favor of a homegrown ad platform, Spotify Ad Studio.
Sirius XM Radio made the biggest news of the year in September by announcing the acquisition of Pandora to form the self-proclaimed “world’s largest audio entertainment company.” Sirius hopes that joining forces with Pandora, the largest US streaming music provider, will allow Sirius to reach listeners beyond the car audio systems Sirius has long dominated. Just considering advertising reach, the impact of this combined company is going to be colossal. According to the official announcement, Sirius XM does not plan to make immediate changes to Pandora’s veteran streaming service, powered by its trademark Music Genome Project content-programming algorithms. Pandora was founded in 2000 (those heady dotcom days) and has an estimated 2,000 employees in both the Bay Area and Atlanta, where the company has been growing its presence. The all-stock transaction, totaling $3.5 billion, is expected to be completed during the first quarter of 2019.
As we covered in our last post (and the MT podcast), Apple was finally able to complete the acquisition of UK-based Shazam Entertainment, announced in December 2017 but delayed by EU concerns over potential antitrust rule violations. Founded in 2000, Shazam was another early player in the mobile music marketplace with their popular song-identifying app that uses audio fingerprints to let users quickly pull up artist and album information and launch streams in Spotify or buy on iTunes. When the sale was announced, Shazam had 250 employees at their home base in London, with seven satellite offices in the US, Australia, and Germany. Apple acquired Shazam—and all its data on what listeners are interested in worldwide—for $400 million.
Rumors swirled that Apple would buy Asaii, an automated machine learning A&R and music management platform that quietly announced its October 14 shutdown. Later reports clarified that it was more of an “acquihire,” with Apple bringing on Asaii’s founders Sony Theakanath, Austin Chen, and Chris Zhang. The magic behind Asaii’s recommendation engine should help Apple Music vie with Pandora and Spotify’s discovery capabilities. Asaii called themselves the “Ultimate Artist Discovery Platform,” offering tools for A&Rs to spot future hits and scout talent. The terms of the deal were not disclosed by either company, but reports place the costs under $100 million.
Apple closed out the year with the December acquisition of Platoon, another A&R start-up that offers creative services to musicians, writers, and other creators. Founded in 2016 and headquartered in London, Platoon had close connections with Apple thanks to CEO Denzyl Feigelson, who spent fifteen years as an exec at iTunes and remained an adviser for Apple Music. Apple remains tight-lipped about the deal, but for now Platoon’s twelve employees continue the company’s work as “a platform for fearless creatives” discovering and nurturing emerging talent. Is this a sign that Apple is dipping a toe into direct-to-artist channels, as we speculated in our 2018 round-up? Only time will tell.