Business Insider – US music streaming service Spotify has announced it will be shutting down as a part of a $10.7 billion merger deal with music curators, in a move that could potentially lead to the downfall of some of the most popular streaming services around.
The merger deal, announced Tuesday, is expected to close in the third quarter of 2018, according to a statement from Spotify.
“We have been working for many months to develop this merger with the goal of accelerating the transformation of the music industry.
The combination of these companies gives us a clear path to deliver on our long-term strategic vision,” Spotify CEO Daniel Ek wrote in a statement.
The companies’ combined platform will be used to manage music, as well as to make the content available to millions of users around the world, the company said.
The new streaming services will be owned and operated by Spotify and the existing Music Platform, which includes music services like Rdio, TuneIn and Deezer.
In its announcement, Spotify said it would merge with the Music Platform to “better serve our customers and to deliver better content to our consumers,” but the merger is not final and could change after it closes.
It did not disclose how much Spotify would pay for the new company.
The combined company is expected hit a price point of about $12 per user, according an analyst at research firm Technomic, but Ek did not reveal how much.
The deal would make Spotify one of the biggest streaming services in the world by revenue, with revenue expected to grow from $1.5 billion in the fourth quarter of 2019 to $6 billion in 2020, according Toilolo analyst Robert Ladd.
Spotify would continue to be a “leading service in the music streaming market,” Ladd said.
“This merger would enable us to deliver a broader range of services and make the music experience more accessible and enjoyable for our users and partners,” Ek said.
Spotify will continue to exist as a separate company and will continue “to continue to offer our content through its own music service,” he added.
The acquisition would also give Spotify an opportunity to focus on building a music service that would compete with streaming services like Apple Music and Spotify.
Spotify has already launched a streaming service called Playlists, which is a curated catalog of curated music that Spotify also owns.
The company’s Music Platform has also been acquired by rival Beats Music and will become part of Apple Music in 2019.
“With the Music and Music Platforms combined, we will be able to provide the best curated music experience in the industry,” Ek wrote.