Spotify buys Tunigo: What does it mean for rivals, startups and investors?


vertical-logo-primary-green-black-rgbIt’s been a busy couple of years for Spotify, but not for acquisitions: the streaming music service has been distinctly quiet on the M&A front. On Friday, though, the company confirmed its acquisition of music discovery startup Tunigo for an undisclosed amount.

The Swedish startup was one of Spotify’s first partners on its desktop apps platform, before launching the Tunigo Play iPhone app last Autumn. Its Android app is currently in private beta.

The official statements don’t shed huge light on Spotify’s plans for its new subsidiary: “Tunigo has been one of the most popular apps on the Spotify platform and the team share our vision of bringing more amazing music to people to soundtrack their lives,” explains Spotify.

Meanwhile Tunigo CEO Nick Holmstén says that “This is the perfect match from a music discovery perspective. We’re passionate about music and technology, and looking forward to further innovating within the music discovery space.”

The deal sends out a number of messages, though. To investors, it represents an exit for a startup that built a business on Spotify’s platform, which may help others looking for funding.

To startups, it holds out the promise of similar acquisitions, but also serves as a warning that Spotify is prepared to bring apps in-house that may compete with their own. For rival streaming services, it may fire the starting gun for similar acquisitions to keep up. In 2013, Spotify – just like any other online platform – holds opportunities and risks alike for startups filling holes in its featureset.

It’s also worth thinking about why Spotify bought Tunigo in particular. Some journalists quickly compared this to Twitter’s acquisition of We Are Hunted to build its Twitter #music app, but we think a more important comparison is with Songza.

Tunigo provides “Spotify playlists for all of life’s occasions”, with a similar focus on context to the Concierge feature that’s made Songza so popular in the US. The Tunigo deal reminds us that when companies like Spotify see competition coming from a new, more-niche music service, a healthy ecosystem of developers and startups may be the key to responding quickly.

Written by: Stuart Dredge