As the race continues to pick up more subscribers for streaming music services, TechCrunch has learned that one of the most prominent players in the field quietly picked up some talent and tech to advance its position. Apple hired at least 16 employees and purchased select technology from Omnifone, an early player in streaming music services that filed for bankruptcy this summer.
The news emerged as Omnifone’s original founder, Rob Lewis (who was no longer with Omnifone in its final years), prepares for his latest streaming music venture, Electric Jukebox, to launch its first product this week: a music player that plugs into your TV, and a controller that looks a little like a microphone. (More on that here.)
To be clear, Omnifone is not a full acquisition, and it does not merit Apple’s standard confirmation. (That confirmation usually goes like this: “Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans.”)
There was actually speculation that Apple “bought out” or “likely acquired” key assets from Omnifone in July of this year, after a report from Omnifone’s bankruptcy administrators noted that it had found a buyer for parts of the company for $10 million. The rumor at the time was that that buyer was Apple. Those acquisition reports, however, were discredited fairly swiftly.
But fast forward just one month later, and it looks like at least parts of it were true.
About 16 of Omnifone’s London-based employees on LinkedIn all changed their employer to Apple, and a source tells us that in fact there was some technology picked up alongside the talent grab. It includes a license to the patents and right to purchase them in future, but no actual patents.
It seems like a logical conclusion that Apple would make the hires and buy the tech from a music startup to work on Apple Music-related services.
Music is a fairly new line of business for iPhone maker Apple, but it’s taking on more prominence as the company pushes into new revenue streams to offset slowing smartphone growth. In the last quarter, Apple noted that services revenues collectively were up 24 percent to $6.3 billion from $5 billion a year before.
While Apple did not break out Music revenues, it noted that these were up 22 percent. In other words, they grew slightly slower than services overall — one reason why Apple may be looking at ways of improving that with new talent and tech.
The list of employees that made the move from Omnifone to Apple includes engineers working on iTunes and apps, among other roles.
Omnifone has over 50 patents registered to it, covering areas like digital media identification, streaming and downloading. A source claims that some of the tech has also found its way into Apple Music and iTunes, although Apple declined to comment on any specifics when we asked.
Omnifone, founded in 2003 in London, was one of the first companies to try to build a business around unlimited music streaming services for mobile devices — a move that was ahead of its time, coming as it did years before Apple and Android smartphones changed the whole market and when mobile networks were still painfully slow.
At its high point, Omnifone had global deals with labels and snagged a number of large companies as clients. Among them were handset makers like Samsung, BlackBerry and Sony Ericsson (later just Sony), as well as large mobile operators who all wanted “sticky” music services to attract more customers, but lacked the expertise or industry connections to build these themselves.
Over time, though, those companies backed away from their ambitions, resulting in business losses for Omnifone that it never managed to offset with other activities. Meanwhile, newer, single brands like Spotify emerged as cross-platform leaders in the space — leaving white label provider Omnifone unable to pay its bills and to run up huge debts.