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Why Spotify just bought a data science startup

June 24, 2015, 11:50 PM UTC
Spotify Press Announcement
Spotify founder Daniel Ek speaks during the Spotify New Platform Launch at S.I.R. Studios on May 20, 2015 in New York City.
Photograph by Taylor Hill — FilmMagic/Getty Images

As Spotify faces increasing pressure from rival streaming music services like Apple Music, Google Play Music, it’s turning to data science to help distinguish it from the pack.

Spotify said on Wednesday that it had acquired a small data analytics startup, Seed Scientific, which previously crunched data for Spotify competitor Beats Music, which Apple (AAPL) gobbled up last year for $3 billion. Apple has since absorbed Beats into its Apple Music streaming service.

Terms of the deal were not disclosed, but a statement by Seed Scientific says that the company as well as its core technology will become part of a new Spotify data analytics unit, which the startup’s CEO Adam Bly will head. The new unit will presumably help Spotify improve its song recommendations for listeners, help musicians understand where their fans may be, and generate more targeted ads, according to TechCrunch.

The deal makes sense for Spotify as it attempts to improve its services amid an increasingly crowded field of rival streaming-music services.

Last year, the New York-based company bought a music data specialist startup, The Echo Nest, which analyzed over 35 million songs and unearthed a trillion data points on those songs that could help it make better song recommendations to users. Spotify was an early client of the company, which also counted MTV and Clear Channel as customers.

Spotify, like video-streaming provider Netflix, cares a lot about making recommendations to its users. The company has been using a subset of artificial intelligence technology known as deep learning to train its systems to recognize patterns in music and recommend songs to listeners that sound like the songs they like. If a listener really enjoys the Beatles, for example, Spotify’s technology may recommend a tune by the Zombies, a band from the 60s that recorded some songs that are somewhat similar to some of the Fab Four’s big pop hits.

Essentially, by buying Seed Scientific, Spotify is adding more data analyzing muscle to its core technology that seems to go beyond just recommending better songs to users. Correlating tons of data to better tailor ads to listeners’ tastes would definitely be welcome to Spotify’s advertisers and partners.

Seed Scientific had a handful of clients outside of the music business as well like General Electric (GE), Audi, and even the United Nations.

Of course, Apple, which is preparing to tussle with Spotify in the music streaming space, said Wednesday that Grammy winner and pop phenom Pharrell Williams will have a new song available on June 30 that listeners will only be able to hear via Apple’s service. Exclusive deals like these are one way to beat data science.

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