Google has offered $15 million to acquire curated playlist site Songza, according to the New York Post.
The deal would give the search giant company a new music property that could improve its Google Play Music All Access subscription service or a future YouTube product, as the Mountain View, Calif.-based company maneuvers against Apple, Spotify and Amazon to gain the upper hand in the streaming music sector.
Songza chief executive Elias Roman couldn’t be reached for comment, while a Google Play executive and another Songza employee declined comment on the report. Attempts to reach multiple Songza board members were unsuccessful by press time.
Amazon.com, a Google competitor in some areas and an imminent entrant into the streaming music sector, has invested in Songza, and its VP of digital music Steve Boom is listed as a Songza director on a 2013 regulatory filing. Amazon did not return a phone call seeking comment.
Launched in 2010, Songza streams playlists designed for specific moods or activities, often tailored to times of day or other contexts such as “getting ready to go out.” The company employs dozens of expert curators who design the playlists, with names such as “Are You Experienced? Psychedelic Space Trips,” “80s Hardcore Punk Boot Camp” and “Tonight’s Slow Jams.” It even incorporates the weather around a user’s location into its suggestions, offering “rainy-day” or “starry-night” songs, under a recent partnership with the Weather Channel’s parent company.
Streaming services have relied increasingly on curation, including human-powered playlisting, as a differentiator beyond radio-like functions and algorithmically-designed song sequencing. Beats Music, for example, uses a brief fill-in-the-blanks questionnaire to deliver playlists, where users can describe their own moods or activities while requesting a genre. Apple agreed to acquire Beats, along with headphone and portable speaker vendor Beats Electronics, for $3 billion in a deal announced last week.
Unlike Beats or its competitors such as Spotify and Rdio, however, Songza doesn’t provide an on-demand streaming service that allows users to pick specific songs. It began as Songza Sets, a discovery-oriented product offered by downloadable music store Amie Street, whose founding team eventually sold the store to Amazon in 2010 and focused on Songza instead.
The company draws revenue from advertising, and limits the number of times a user can skip a song, thereby paying non-interactive webcasting royalties similar to those paid by Pandora and other Internet radio companies. If Google were to acquire Songza, the royalty rates on songs in its playlists would increase, because of the loss of “pure-play” rate privileges extended to companies that specialize in streaming. Songza, which targets both web and mobile users, also introduced 99-cent-per-week ad-free subscriptions last year.
Songza has about 5.5 million active users, a small fraction of Pandora’s 75 million-plus listeners and significantly less than Spotify’s 10 million paying customers, among its 40 million free and paid users.
Google’s Play Music service already offers a smart-playlisting function around a song or artist, but doesn’t include human-curated playlists. As a specialist in this area, Songza is one of several companies thought to be ripe for consolidation, as large tech companies have stepped up their dealmaking in the online music arena lately.
Along with Apple’s Beats buy, other giants are thought to be readying new streaming initiatives; Amazon is reportedly preparing to add music to its Prime service within a few weeks, while Google is believed to be launching a YouTube-branded music service later this year. Google hasn’t released any numbers, but it’s widely believed that uptake of its existing subscription service has been slow.
At the investor level, Songza has connections to two of those three. Beyond Amazon’s cash commitment and prior association with Amie Street, Google VP of U.S. retail sales John McAteer has also invested in Songza, as part of a 2012 convertible note worth $1.5 million.
Songza raised another $4.7 million in a round announced last September, from investors including artist managers Scooter Braun and Troy Carter, as well as Lerer Ventures, Deep Fork Capital, Metamorphic Ventures, William Morris Endeavor, and author Gary Vaynerchuk. Prior investors also include 1-800 Flowers, NBA star Baron Davis, artist manager Julius Erving Jr., and 24/7 Real Media co-founder Geoff Judge.
The original Songza was a search engine that located and streamed music files found on the web. That product was designed by user interface expert, Mozilla designer and serial entrepreneur Aza Raskin, from whose name Songza took its moniker. Amie Street acquired it in 2008.
