Two newly acquired startups are the key.
While competing service Deezer was busy raising new money, music streaming company Spotify gobbled up two startups to help it differentiate its product.
The Swedish company has acquired Cord Project and Soundwave, as TechCrunch first reported on a Wednesday and the startups confirmed in separate blog posts. No terms of the deals were disclosed, but Spotify likely didn’t pay very much as the companies only raised $2 million and $3 million in funding, respectively.
Thought it’s not clear what Spotify plans to do with its new acquisitions, it most likely will put them to good use toward the service’s social and communications features. Founded in 2012 in Dublin, Ireland, Soundwave used group messaging and playlists to create a watercooler feel for users to discuss music with others and was downloaded more than 1.5 million times. Cord Project, on the other hand, debuted in late 2014, and let users send and receive short voice messages in a way akin to sending text-based messages back and forth. It amassed more than one million users, the startup says.
While Spotify hasn’t decided yet what will happen to Soundwave, Cord’s mobile app will be shutting down soon.
This pair of acquisitions by Spotify are strong hints at how the company not only plans to differentiate itself from the competition (U.S. rival Apple AAPL Music is quickly gaining users and paid subscribers), but also how it hopes its music streaming service will evolve. While sending messages to other Spotify users is something already available, Soundwave’s focus around discussions goes nicely with Spotify’s recent partnership with lyrics annotation tool Genius. Music has long been an art that draws people together, through discussion and common appreciation and Spotify clearly wants to help facilitate that. Though Spotify specifically told TechCrunch that doesn’t plan to integrate Cord’s voice messaging into its service, its team’s user interface and design skills are sure to be useful to the Swedish company.
Both startup’s acquisition announcements also mentioned music discovery, an area growing in importance as music streaming services look for ways to continue to be useful to their users.