In 2016, Kuriakose "Sony" Theakanath and Austin Chen left their jobs at Apple (NASDAQ:AAPL) to found Asaii, a music analytics platform that was hoping to automate A&R (artists and repertoire), the talent scouting and artist development operations of record labels and music publishers, by using structured music data and machine learning. Asaii said it could identify artists months before they hit it big on the charts.

Last month, Asaii abruptly announced that it was shutting down, and it seemed quite likely that the company had been acquired.

Heading back to Apple

Axios reports that Apple has scooped up the San Francisco-based start-up for less than $100 million, citing anonymous sources. Both Chen's and Theakanath's LinkedIn profiles now say they started working at Apple Music this month, effectively confirming the acquisition. Asaii's third co-founder, Chris Zhang, who did not previously work at Apple, has similarly updated his LinkedIn profile and now works as a software engineer for Apple Music.

Asaii had an enterprise product called Asaii Recommend, an API that could connect to a music-streaming service to algorithmically create personalized playlists and recommendations. That's precisely what Spotify's (NYSE:SPOT) Discovery Weekly playlist does, which is one of Spotify's most popular features and a strong differentiator when it comes to content discovery. Apple Music's content discovery tab, "For You," has some catching up to do, and Asaii will help close the gap.

Apple Music interface shown on three iPhones

Image source: Apple.

Meanwhile, Spotify has been trying to woo independent artists with direct deals, which bodes well for its cost structure without stepping on traditional labels' toes too much. Earlier this year, Apple also started expanding into music publishing, which means it will want to bolster its A&R capabilities in a scalable way. A&R has been evolving along with the music industry, which has been rapidly transitioning toward streaming.

Here's Asaii's Ozair Khan explaining where the company comes in (emphasis original):

The role of record labels, and in turn A&R, has paralleled this landscape shift, where record sales have become less and less important, and revenue streams from concerts, streaming services, and sponsorships have become more crucial. Instead of simply choosing music that they may like, they look for music that has been proven in the ecosystem- that the people like, to guarantee a return on their investment.

However, even given this new path to discovering talent, the sheer amount of artists in the music ecosystem and all the data that accompanies them makes sifting through all of it incredibly difficult- the data just being there isn't enough to ensure a statistically backed chance of success.

Apple Music is starting to catch up to Spotify in a big way.

Evan Niu, CFA, owns shares of Apple and Spotify Technology. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.