Apple Scoops Up Music Analytics and Discovery Start-Up Asaii

In 2016, Kuriakose "Sony" Theakanath and Austin Chen left their engineering jobs at Apple (NASDAQ: AAPL) to found Asaii, a music analytics platform that was hoping to automate A&R (artists and repertoire), the talent scouting and artist development operations of record labels and music publishers, by using structured music data and machine learning. Asaii said it could identify artists months before they hit it big on the charts.

Last month, Asaii abruptly announced that it was shutting down, and it seemed quite likely that the company had been acquired.

Heading back to Apple

Axios reports that Apple has scooped up the San Francisco-based start-up for less than $100 million, citing anonymous sources. Both Chen's and Theakanath's LinkedIn profiles now say they started working at Apple Music this month, effectively confirming the acquisition. Asaii's third co-founder, Chris Zhang, who did not previously work at Apple, has similarly updated his LinkedIn profile and now works as a software engineer for Apple Music.

Asaii had an enterprise product called Asaii Recommend, an API that could connect to a music-streaming service to algorithmically create personalized playlists and recommendations. That's precisely what Spotify's (NYSE: SPOT) Discovery Weekly playlist does, which is one of Spotify's most popular features and a strong differentiator when it comes to content discovery. Apple Music's content discovery tab, "For You," has some catching up to do, and Asaii will help close the gap.

Meanwhile, Spotify has been trying to woo independent artists with direct deals, which bodes well for its cost structure without stepping on traditional labels' toes too much. Earlier this year, Apple also started expanding into music publishing, which means it will want to bolster its A&R capabilities in a scalable way. A&R has been evolving along with the music industry, which has been rapidly transitioning toward streaming.

Here's Asaii's Ozair Khan explaining where the company comes in (emphasis original):

Apple Music is starting to catch up to Spotify in a big way.

10 stocks we like better than AppleWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Apple wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Evan Niu, CFA owns shares of Apple and Spotify Technology. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.