Gracenote: Ripe for the pickin'

I've done business with many companies, and one that always sticks out of my mind is Gracenote. Gracenote is a privately held media recognition company based out of Emeryville, CA with a satellite office in Tokyo Japan. Gracenote has a very deep and extenstive meta-data catalogue on media products which they've coupled with recognition technology. Their database includes 4MM albums, 55MM tracks, 8MM audio wave fingerprints, and 17K DVD titles, with all media regionally segmented with 80 countries supported and 15K licensees. Their core markets are portable audio, car audio, and home audio. Who uses Gracenote technology: you do.

Own an Ipod or Creative audio product? Which digital music service do you prefer: I-Tunes, Yahoo! Music, AOL Winamp, Real Rhapsody, or Napster? Own a Sony Vaio? Listen to music in the car or at home using Alpine, Clarion, Panasonic, Samsung, Sanyo, or Sony product? If yes to any of these questions, you're using products with Gracenote technology. Gracenote has recently completed deals with cell phones and PDA manufacturers to embed their technology into handhelds. Imagine being at the club and hearing that killer new tune and not knowing who the artist is. You hold up your cell phone and it immediately recognizes the artist, album, track, and then you just click "Download now." That's super cool, and why they have 8MM wave fingerprints and are continually expanding that number. The market for media recognition technology is expanding, and they control most of the major patents in this area. Competition: little to none, which is why all the major digital media companies use them.

Gracenote was recognized this year at CES with an Innovations Award Honoree, Software and Embedded Technologies, and was named Top 100 Private Companies in 2005 by AlwaysOn and Red Herring. I have no expertise in M&A, but it seems to me this little gem would be a valuable asset to any company in the digital media space, and wouldn't be surprised if someone like Apple acquired them. I'm just surprised that no one already has.