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Summary:

So it has finally happened: Gracenote, the media metadata and tech firm which has been around since 1998, has been bought by Sony (NYSE: SNE…

imageSo it has finally happened: Gracenote, the media metadata and tech firm which has been around since 1998, has been bought by Sony (NYSE: SNE) Corp of America, for about $260 million and more based on contingencies. The deal is expected to close in May.

Gracenote’s existing business will continue to operate separately, and will continue to develop new technologies in existing as well as new areas of operation, the companies said. The senior management team will remain with the company. The company’s tech and services are used in Apple (NSDQ: AAPL) iTunes, Winamp, Panasonic, Philips and Sony, and on the mobile music side by players such as from Samsung, Sony Ericsson (NSDQ: ERIC), and others.

Thus ends the era of any independents in the traditional music metadata space. AMG was bought by Macrovision (NSDQ: MVSN) late last year; Muze is owned by VC/PE firm Enterprise Partners Venture Capital.

Philips and Fraunhofer had equity position in Gracenote because of the technology that Gracenote either bought or licensed over the years. Other institutional investors over the years (over five rounds) included Sequoia Capital, Bessemer Venture Partners and others.

Updated: Some more background on this: Gracenote would probably bring in around $40 million in revenues this year (separate from its revenue bookings which could be much larger). Gracenote’s technology could easily be used across all of Sony’s divisions, though we know well, the synergy part within Sony is no always easy. Easy plugs-ins would be into Playstation group, Sony Ericsson (probably the most important part with mobile music and handsets, worldwide), and other multimedia devices out of Sony.

Gracenote has also been working with other social networking services such as MySpace to develop tools against illegal upload, but that is a small part of its business. The most interesting part is that now Sony supplies one of the most important pieces of data to Apple iTunes…iTunes would not be able to function without Gracenote’s technology, as someone explained to me. Did Apple try to put in a counter-offer on the deal because of the importance of this technology?

  1. Correction: iTunes has plenty of options (make their own DB like MSFT did, work with AMG Lasso, etc.) and will be just fine with our without Gracenote.

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  2. This would appear to be more of a good exit for Gracenote investors than a good strategic buy for Sony. Sony already uses alternative solutions for the PS3 and other products (AMG), and a number of companies have already begun to use alternatives as well (RealNetworks recently started using AMG for example). For 260 million dollars Sony could have easily have built their own service many times over, or bought unlimited services from alternative providers for much less. My guess is that Sony bought the kool-aid and got out-sophisticated by clever Sequoia negotiators that made it seem that Gracenote is somehow the only game in town.

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  3. Just FYI, I am the real Jack Bauer. I agree with Jack Bauer #2 (11:12PM) 100% but he is not me. Sony got dooooooooped!

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