Google Inc (NASDAQ:GOOG) (NASDAQ:GOOG) has entered the music stream business in purchasing Songza, a company with just 5.5 million active listeners. While terms were not disclosed, various press reports estimated the deal to be worth $15 million. The small price could result in a big deal with Google’s marketing platform supporting the small firm with a strong music recommendation capabilities.
Google wants Songza’s technical platform
Match maker’s note Songza has a technical platform Google wants and with its promotional muscle it can increase its listener base substantially. Compare Songza’s relatively slight 5.5 million listeners to Spotify, which has over 40 million active listeners. It is Google’s promotional platform that Songza can use to take on Pandora or Apple.
Apple recently acquired streaming music service Beats Music in a deal worth $3 billion and at the time financial analysts said the price was rich due in part to Beats “cool factor.” At the time of the announcement, Apple Inc (NASDAQ:AAPL) executives noted that the strength of Beats Music’s curation played a role in the decision to buy the company, with Apple CEO Tim Cook saying Beats is the first streaming music app “to get it right.”
The curation of songs is behind the success of Music Genome Project, which represents 10 years of analysis of music and is the back-end of Pandora music recommendation engine. Building this engine and collecting data for each song – which can take up to 20 minutes per song – is why Google’s purchase of Songza could be a bargain, if the $15 million price tag is accurate.
Google’s other streaming music products
Google already has streaming music products, like its Google Play store, Google Play Music All Access premium-subscription service and YouTube, which recently began charging musicians for participation. These services lack strong music curation and recommendation engines.
Another interesting point in why Google might be behind in the music race, as Business Insider points out, is that Music doesn’t respond to search algorithms — Google’s key strength — the same as media like words or images do. The report notes that it is simplier to program software to recognize matching words or strings of text than it is for software to “listen” to audio, code it correctly with the right attributes, and then make those attributes discoverable either in a search or as a stream of similar songs as Pandora does.