Microsoft Spinning Out Nokia MixRadio

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Nokia MixRadio, the Pandora-esque music streaming service that Microsoft acquired as part of its takeover of Nokia’s Devices and Services business, is close to being spun-out as a separate entity.

According to sources, Microsoft is in the midst of seeking out investors for an independent Nokia MixRadio. And, although nothing is official yet, it’s my understanding that the spin-out (update: first reported by The Guardian in July) is making “good progress” and could close soon if talks stay on their current course.

It’s not clear, however, who those investors are. Or which European (or otherwise) VCs might have an appetite to invest in a music streaming startup. Many have already invested in rivals Spotify and Deezr, after all.

(As a side note, one potential candidate — and this is purely speculation on my part — might be VersoVentures, which recently announced a €50 million fund for corporate spin-outs in Finland and elsewhere in Europe.)

But, either way, an independent MixRadio — which would free it up to compete with greater autonomy in what is an increasingly crowded music streaming space — does make a lot of sense.

As it stands, the service, which comes in free and premium versions and lets you create a ‘radio station’ based on genre or similar artists, is chained to Microsoft’s Windows Phone platform, after it originally came bundled with various Nokia Lumia handsets. Breaking free from Redmond would allow it to become platform agnostic.

Meanwhile, for investors — and much further down the line, for any potential exit/acquirer — not only does Nokia MixRadio have deals in place with record labels/publishers, seeing its availability in 31 countries, the ex-Nokia unit also has legacy relationships with mobile operators, something that could be valuable as part of a much wider music services strategy.

It wouldn’t, for example, be surprising to see an independent company cut deals for MixRadio to be bundled with various mobile phone tariffs, something others in the space are already doing.

The move to offload Nokia MixRadio would also make sense for Microsoft, considering that the service has overlap with its own home-grown and cross-platform music streaming service, Xbox Music, which makes it slightly odd that the Nokia Music unit was included in the Nokia Devices and Services acquisition in the first place.

I’ve pinged Microsoft for comment and will update this post should we hear back.

Featured Image: Bryce Durbin