July 21, 2014

Google has officially announced its acquisition of the music streaming service, Songza, for an estimated $39 million to take on giant players like Pandora Media Inc, Spotify and Apple, and to compete in the world of digital music streaming.

Streaming music business is heating up after Apple reportedly bought Beats for $3 billion that creates expert-curated playlists. It was touted that Apple would be soon the fastest growing segment in online streaming market and now, Google’s buyout of Songza, can be a major concern for Apple Inc. and further heighten the rivalry between them. The online streaming business is going to face a stiff competition where iTunes, iHeart Radio and Spotify are already competing for market leadership. Pandora’s dominance over streaming services is likely to take a major beating with this merger as well.

Songza, a 4 year old music intelligence firm, uses contextual curation to build playlists and recommendations to give the right music at the right time to the user and adapts to a user’s musical preferences. The app generates playlists to match the user’s mood at particular times of day and with activities like waking up, working out, commuting, entertaining or unwinding. Such clever data mining is invaluable for Google.

Google’s interest in Songza intensified after it embraced the fact that it had failed to adapt to the streaming business and similar services started gaining pace with other companies. Songza’s playlist creation services are free along with advertizing, which will provide Google with a free music service and the fact that it doesn’t have to invest in creating such a technology altogether will give it an edge. Songza’s 5.5 million user base isn’t that impressive as compared to Pandora that has around 76 million active users, but as of now Google wants to focus more on the product’s features. Owing to its brand appeal, Songza is expected to get enormous potential audience in the meantime.

Songza’s representatives are delighted with this merger and are confident about its future. Songza’s employees will join Google and work from their base in NY. For the time being Songza is likely to remain an independent app and no immediate changes will be made while the company’s technology will be incorporated into Google Play Music, YouTube and other products. However, a few changes like speedy and smarter searching to enhance user experience will be made.

This move by Google is strategic and aims to hold the reins of streaming music business. With high aspirations from Songza, Google hopes to re-invent the music business again.