Samsung buys US Spotify clone, hopes to bruise Apple's eco-system

All it needs is international music rights

By Faultline, 13th May 2012

You don‘t have to be a genius to know that mSpot, which has just been bought by Samsung Electronics in the US, is going to go through both a transformation and a huge international upsurge in usage, if it has, or can get, international music rights.

Samsung has been talking about a rival to iTunes for some years, ever since Apple decided, at the last minute, to buy flash memory for iPods from the entire NAND flash market (in 2004) rather than using Samsung as its sole supplier, after talks broke down between the two.

Increasingly the relationship between the two tech giants has both strengthened – with Samsung providing early chip technology for the production of the A4 chip, and more recently screens for Apple devices – and deteriorated, after Apple has sued the Galaxy range of devices for copying look-and-feel, gesture controls and other Apple-dominated technologies, with resultant cellular intellectual property counter-suits.

mSpot is a privately held, Palo Alto based provider of mostly music services, but also offers video delivery to mobile devices, and although the value of the purchase was not revealed, it is likely to be significant, because mSpot – more Spotify-like than iTunes alike – will have realised how valuable such a move is for Samsung.

Samsung was thought to have invested $5m into mSpot in the past and a valuation of over $100m is likely, and also likely based partially on future success.

At present mSpot offers white-labelled cloud entertainment services for mobile carriers and consumer electronics companies – perfect to bundle into both Samsung smart TVs, as well as Galaxy devices of both the handset and tablet variety.

The deal has to signal a homing-in approach on Apple by Samsung, and it will be critical whether or not mSpot currently has music rights which extend outside of the US – if not that will be the next target.

We would not put it beyond Samsung to buy into another European aggregator to get rights quickly, and retrofit the service into mSpot software and cloud services. Currently mSpot customers include Verizon, AT&T and Sprint, through which it reaches six million mobile customers – even in the US, that could potentially be far higher.

mSpot also offers music access on any device and offers support for MP3, MP4, AAC, AAC+ and WMA formats, and allows consumers to upload their music to a storage locker in the cloud.

It offers 5GB of data for free and 40GB for $3.99 a month and was in existence a long time before the Apple iCloud offering. Mspot goes all the way back to 2004, and as well as white-label services, it also has its own brand service available in Android Market.

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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