Yowza wowza, Google just bought Songza for a reported $39 million. As you might guess by its name, Songza is a music streaming and recommendation service. Free to users, it offers playlists crafted by music experts.
That, in itself, is not much different than what other music streaming and recommendation services offer. But Songza has a different spin on digital music with its playlists that are based on mood, time of day or activity. For example, you can spin a list for working out or sleep time, waking up or commuting. You can also tap songs based on specific interests, themes and eras.
Google confirmed the purchase, though not the sales price, on its Google Play Google+ page. The technology giant said Songza has built a “great service” that uses contextual expert-curated playlists to give you the right music at the right time.
“We aren't planning any immediate changes to Songza, so it will continue to work like usual for existing users,” Google said. “Over the coming months, we’ll explore ways to bring what you love about Songza to Google Play Music. We'll also look for opportunities to bring their great work to the music experience on YouTube and other Google products.”
Is this Google’s answer to Apple's $3 billion purchase of Beats? Not exactly, but it could be a move against the likes of Spotify and even Beats Music, which industry watchers say accounted for about $500 million of the $3 billion deal.
Google Play is home to a music download store and a subscription music service known as All Access that is going head to head with Spotify, though perhaps without the strong brand recognition in this competitive space.
We caught up with Greg Sterling, principal analyst at Sterling Market Intelligence, to get his take on the latest Google buy. He told us the acquisition is clearly intended to bolster Google's streaming music service over time.
“For now the Songza brand will remain,” Sterling said. “However, I suspect it will be entirely folded into Google Music in the relatively near term.”
The Big Picture
Google clearly sees opportunity in streaming music. Players like Pandora, Rdio, Rhapsody, Rara, iHeartRadio, and a slew of smaller players have been vying for a piece of the pie for years but the market is getting hotter.
According to Midia Consulting, which was commissioned to prepare an industry report on behalf of Universal Music Group, about one-third of the globe’s music consumers have used streaming music services. However, only about 10 percent actually pay for these types of services.
The Recording Industry Association pegs the total U.S. retail market for music at about $7 billion a year. Only about $571 million of those revenues came from streaming music in 2012. But Google is looking long-term with the Songza buy, and the start-up couldn’t be any happier to join the Internet giant.
“We can’t think of a better company to join in our quest to provide the perfect soundtrack for everything you do,” Songza said in a statement. “No immediate changes to Songza are planned, other than making it faster, smarter, and even more fun to use.”