Google is fine-tuning its digital music strategy with the
acquisition of Songza, a deal that more than just about music.
Songza, a music website that creates soundtracks tailored
for people’s changing moods, launched its app in 2010 and has relatively few
listeners—5.5 million, compared with 75 million for Pandora Media and 40 million for both
Spotify Ltd. and Apple's iTunes
Radio.
When sales of digital music downloads have declined in recent
months, streaming services such as Pandora Media and Spotify have become
increasingly popular with consumers. With Google and its music playlist platform, Songza becomes a bigger threat for the Internet radio
provider. With Songza’s unique method of
preferring human judgement over algorithms to build playlists, Google might be
able to exploit Pandora’s weakness and take the dominant position in online
radio.
On the other hand, the acquisition also highlights the growing importance of
services that customize playlists as more people listen to music through smartphones,
tablets and personal computers. And it heightens the rivalry among Google,
Amazon, and Apple.
Apple Inc. is buying headphone maker Beats Electronics for
$3 billion largely because it prizes the song-picking prowess of a digital
music service that Beats has been building. The music service combines
automated formulas with the expertise of a team led by Beats' co-founders,
longtime recording industry executive Jimmy Iovine and hip-hop producer and
rapper Dr. Dre.
Amazon.com Inc. also recently rolled out a music-streaming
service that is part the company's $99-per-year Prime package.
Google is making similar moves. Songza is best known for
its technology that uses variables like time of day and a listener's situation
to create customized music playlists, but it hasn't moved beyond music and ads.
Google has been looking to improve the recommendations it
provides via the Google Play store. Google plans to blend Songza's technology into its
own music-streaming service. It views music and
other content as strategically important to attract and retain users on
Android.
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