Spotify has now absorbed Stockholm-based online music tools maker Soundtrap, according to an official announcement from the streaming company. For those who aren't already aware, Soundtrap has effectively sought to make it easier for amateur artists to be heard by creating a suite of online music recording and production tools. Spotify, on the other hand, is a media streaming platform which offers both paid and free versions of its services.
Following the acquisition, there hasn't been any mention as to how or even if Spotify will incorporate those tools into its other platform. Bearing that in mind, the announcement also did seem to suggest that Soundtrap's team will be working directly with Spotify. It is always possible that some of the tools from Soundtrap could either find their way into Spotify or that Spotify could seek to create a dedicated mobile application for Soundtrap users. On the other hand, the company could also just incorporate new ways to share music created on Soundtrap through Spotify. However, the company says that Soundtrap will continue to operate as it did before the deal was announced, so it's equally likely that the company will keep the two entities completely separated for the time being. At this point, it may just be too early to postulate without Spotify further clarifying the matter.
Having said that, the income generated by Soundtrap – which has plans that start out at no cost for limited features and work up to a subscription costing around $144 per year or around $15 per month – could be used to serve as a buffer to Spotify's financial standings. Spotify has not generated substantial profits to date, despite its 120 million active users and 60 million paying subscribers. The news also follows a failed bid from Tencent, which sought to acquire Spotify earlier this year. That reportedly fell through because Spotify planned to take the company public. The acquisition should also help bolster the company's valuation which was recently raised to $16 billion but which some experts believe could be pushed to $20 billion following an initial public offering that may come as early as next year, according to previous reports.