Music Ally

2010 is shaping up as a big year for mergers and acquisitions in the digital music space, continuing the trend seen in the latter months of 2009, when the likes of Lala, Imeem and iLike were all snapped up, for varying amounts. So which services and startups might be under new ownership this time next year? Here’s some of our predictions.

eMusic

You don’t have to be a soothsayer to suggest that eMusic may be bought in the near future – the company effectively admitted it was open to offers (i.e. shopping itself to potential buyers) just after Christmas. Boss Danny Stein told the New York Post that “We’re opportunistic stewards of capital… If an offer was made that created value for our shareholders we’d listen to it.”

Best Buy and Rhapsody are thought to be potential buyers for the subscription-based download service, although its star has waned somewhat due to the rise of streaming music services like Spotify and Pandora, and also the spread of DRM-free music to bigger retailers.

The Pirate Bay

The Pirate Bay will probably be sold this year, although we’d venture it WON’T be to Global Gaming Factory X, the company that spent much of 2009 trying and failing to complete an acquisition of the infamous torrent tracker. Recent reports suggest The Pirate Bay’s shadowy owners are in talks with up to four companies about a new deal, although suffice to say none of those suitors are thought to be legitimate music firms.

The question with The Pirate Bay is what any acquirer will get for their money – do they get the domain name and brand without the legal liabilities? And how do they stop its millions of users melting away to rival torrent sites if they take it legit?

Spotify and Pandora

Their success in 2009 means there will be no shortage of potential suitors for streaming music firms Spotify and Pandora in 2010. The question is whether either wants to sell up – they say not, especially while the going is good and they have VC capital in the bank.

Apple’s purchase of Lala seems to rule it out as an acquirer of either company, but it’s hard not to think that the likes of Google and Microsoft, and maybe even music firms like RealNetworks wouldn’t be interested if the opportunity presents itself. We won’t say one or either will be bought this year, but we reckon they’ll be fielding at least one megabucks offer each testing their resolve.

EMI

Not specifically a digital music firm, we admit, but the gossip around EMI’s future is heating up again, due to the well-documented financial challenges faced by its owner Terra Firma. As it struggles to meet its banking covenants – not to mention fights a legal battle with financing partner Citibank – Guy Hands’ company may find a sharp exit increasingly appealing.

As ever, Warner Music Group is lurking with an interest in buying its smaller rival. Come summer, a choice between a sale or financial meltdown could see the long-trailed merger finally go through.

Kyte

Kyte has been fairly quiet in recent months, compared to the hype around its band-to-fan video technology a couple of years ago, and its subsequent iPhone apps for UMG artists like Lady Gaga. However, those apps could be one reason Kyte makes an appealing acquisition for a label, looking to capitalise on the iPhone boom with an in-house team rather than outsourcing. Video plus apps plus iPhone (and hopefully other platforms too) could be the perfect spark for an acquisition – if labels are bold enough to take the risk.

Midomi

Music recognition firm Shazam had a storming 2009, topping 50 million users by the end of the year and taking Silicon Valley VC funding. Which, strange though it may seem, is why we think rival Midomi could make a tempting acquisition target for a mobile handset firm. Sony Ericsson has shown the value of tying this kind of recognition technology into its phones, so what price Nokia, HTC or Samsung taking Midomi in-house and linking it with their own stores and music offerings?

What do you think? Post a comment with your predictions of who might get bought, and why.

Tags: EMI, eMusic, Kyte, midomi, Pandora, spotify, the pirate bay

This entry was posted on Wednesday, January 13th, 2010 at 2:30 pm and is filed under Digital Music Strategy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.