According to a report from the Wall Street Journal, Google attempted to purchase music-streaming service Spotify late last year. Sources close to the matter are stating that talks broke down for a number of reasons, the primary cause being that the asking price for Spotify was simply far too high, although no actual numbers have been given.
Rumors regarding Google’s interest in Spotify have been circulating in and out of fashion for a little while now, and it seems reasonable that Google would be interested in Spotify’s 10 million paying subscribers and 30 million free users for extra advertising revenue. However, Google already has its own music streaming service in full swing these days, so the need to outright buy another service has somewhat diminished.
The other reason for the apparent breakdown of talks, according to the WSJ, was due to Larry Page’s “lack of enthusiasm for subscription entertainment services”, which seems somewhat at odds with Google’s All Access subscription model.
However, Re/code seems to think that the acquisition story is hogwash. Its own sources, both from within Google and Spotify, claim that negotiations never took place to begin with, and that there was never an evaluation to even reject.
“There has not been a single conversation about Google’s interest between the two … There was never a price, never a negotiation, never anything.”
Furthermore, Page has apparently expressed an interest in Spotify beyond its online advertising business, including pursuing subscription services, although nothing that resorted to any formal or informal talks between the two companies.
So why the contradictory views?
At lot of the speculation seems pinned on an official announcement from Google, made back in December, that the company attempted, and failed, to purchase “a foreign company” for a value of around $4 to $5 billion last year. Secondly, that Spotify recently underwent a $250m funding round, valuing the company at a similar $4 billion valuation as Google’s failed acquisition. However, this seems far from concrete evidence of anything.
Speculation is also revolving around a number of employees who have worked for both of the companies, who may or may not have had a hand in any merger discussions. Google’s new business lead Omid Kordestani recently took a position on Spotify’s board, and former Google executive, Shishir Mehrotra, is also now a special advisor to Spotify CEO Daniel Ek. Apparently, Daniel Ek has also had meetings with Google to discuss “various and substantive commercial deals”, although again nothing which we can link directly to an acquisition.
“Google likes Netflix too, but it’s not buying it,”
To add further fuel to the fire, Google has recently purchased Songa in a bid to improve its media streaming services, suggesting that Google is still very interested in expanding its online media business.
With neither Google nor Spotify commenting on the matter, we’ll probably never really know what really went on. Either way, Google and Spotify remain separate entities, for now.