Yahoo (NASDAQ:YHOO) announced a new deal with Spotify, one of the largest online music streaming services, which would enable it to integrate Spotify’s on-demand music service on Yahoo’s media properties with an audience of nearly 700 million monthly users. Spotify’s service will initially be rolled out to Yahoo Music, but will later be integrated with its other content portals. Yahoo will also create an app on Spotify’s platform to bring Yahoo’s original content to Spotify’s user base. [1]
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Yahoo currently uses Rhapsody’s service to provide on-demand music to its users, but that will soon be replaced by Spotify. The new iteration will also simplify the process, enabling users to play songs and other content without leaving the website.
With the Spotify integration, Yahoo is trying to improve its music service which is a significant part of its media offerings. And by doing so, it aims to retain and further expand its user base and eventually monetize them in a better way to maximize its advertising revenues.
We currently have a $18 Trefis price estimate for Yahoo, which stands nearly 20% above its market price. Yahoo’s search and display advertising businesses account for 15% and 12% of its overall value, respectively. It competes with Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB) in the global online advertising space.
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