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Search - Thursday, April 24, 2008

Sony Pays $260M For Music Recognition Service Gracenote

Sony is buying Emervyille-based Gracenote for $260M. We expect that a:c readers are familiar with Gracenote - it's a database of music titles, artist names and lyrics used in digital music applications like iTunes.

Founded in 1995, Gracenote has been criticized for turning the once open source CDDB project into a for profit business. In August 2005, Gracenote raised a $10.9M series E round, yielding a post-money valuation of about $121M. Gracenote Founder Scott Jones and Sequoia Capital are the two principal investors, together owning about half of the company. Bessemer Ventures owns around 10%, and the latest investor is Philips Electronics.

To make a living, Gracenote licenses a suite of products to consumer software and hardware makers that helps users identify and label multimedia content. If you've used Apple's iTunes, AOL's Winamp, or another digital music manager, you've probably seen the "CDDB" icon searching for CD information -- that's Gracenote's flagship database at work. CDDB provides CD information via the Internet when users are burning CDs or storing music on their hard drives. The company provides text-based information, such as the song title, length of play, and artist's name. Since most commercial music CDs do not contain any such information, CDDB is accessed by the millions of users. The service is free to consumers and licensed by developers of consumer electronic devices and applications.

In August 2005, Gracenote also acquired the rights to technology from Philips Electronics that can identify song files by their audio "fingerprints."

The Philips fingerprinting technology is also the foundation of Gracenote's service that allows users to identify music by simply holding a cell phone up to the radio; they can then order the song through their phones. Gracenote has also gained access to Philips technology that identifies video files from DVDs. This service may become valuable, as consumer electronics companies roll out devices that store DVDs on hard drives, letting users search for, say, "all Bill Murray movies from the 1970s."

Gracenote competes with Allmusic, as well as several open-source music-identification services: MusicBrainz, freedb, and ThreeTix.

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