Seeking Alpha

Google buys Songza

  • Google (GOOG +1.3%) says it will "explore ways" to integrate Songza, whose Android/iOS apps (5.5M MAUs) deliver human-curated music stations based on mood and activity, with Google Play Music. "We view the Songza acquisition as a way to further enhance our radio feature by adding their expertise on context."
  • The Web giant adds it will also look at ways to use Songza's curation/music recommendation expertise within YouTube and other products. Google has already announced plans to launch a YouTube music subscription service later this summer.
  • No purchase price is given for the deal. The NY Post previously reported Google had offered $15M.
  • Pandora (P), which currently has 77M active users to Songza's 5.5M, is down 2.1% AH.
  • Update: The NYT reports Google paid more than $39M for Songza.
Comments (21)
  • manicdvln
    , contributor
    Comments (830) | Send Message
     
    Apple bought Beats
    Google bought Songza
    Amazon made its own Prime music service
    Microsoft will never buy another company from Pandora CEO.

     

    Like I said, no one will buy this garbage company, let alone for 6 billion+ with no profits over a decade.
    1 Jul 2014, 04:34 PM Reply Like
  • Rex Kwon Do
    , contributor
    Comments (59) | Send Message
     
    manicdvin was the first to comment about this?? NO WAY!!! who cares if anyone buys this "garbage" company as you call it. Songza is a waste of money no matter what the purchase price, they have paltry fraction of P's audience. why would google buy this piece of crap considering they are supposed to start the "Anti-Indie" YouTube music service later this summer? Does your ex-girlfriend work at P? You need a new hobby. BTW, we are all still desperately waiting for your $7 (P)rediction to come true... and waiting... and waiting...
    1 Jul 2014, 04:59 PM Reply Like
  • manicdvln
    , contributor
    Comments (830) | Send Message
     
    For 15m the risk is minimal to Google, no matter what they do with acquisition and frankly I don't care.

     

    What matters to me is Pandora is grossly overvalued compared to its fundamentals and comparing to M&A activity which is pricing this garbage less than quarter billion.

     

    Wait till QE ends in 3 months, you going to have your 7$ soon enough.
    1 Jul 2014, 05:16 PM Reply Like
  • dgulick
    , contributor
    Comments (1576) | Send Message
     
    Not $15M: http://bit.ly/VDuev3

     

    "...we’ve heard that there was also a possibility that Songza was being approached by other suitors, raising the price tag considerably"
    1 Jul 2014, 06:47 PM Reply Like
  • manicdvln
    , contributor
    Comments (830) | Send Message
     
    Update: The NYT reports Google paid more than $39M for Songza.

     

    YEP Pandora worth trillions now! LOL
    2 Jul 2014, 09:17 AM Reply Like
  • PChan444
    , contributor
    Comments (514) | Send Message
     
    Implied value of pandora just 225 million? That's crazy! Pandora is worth 390 billion at least. Nobody else can do what they do
    1 Jul 2014, 04:43 PM Reply Like
  • Julian Acosta
    , contributor
    Comments (129) | Send Message
     
    390 billion? Do you mean million?
    1 Jul 2014, 04:47 PM Reply Like
  • 22643611
    , contributor
    Comments (2101) | Send Message
     
    Pfff, Pandora is easily worth 3 trillion!
    1 Jul 2014, 05:52 PM Reply Like
  • dgulick
    , contributor
    Comments (1576) | Send Message
     
    Google's Play Music All Access has competed poorly against streaming incumbents, buying such a bit player (Songza trails mightily http://bit.ly/1mWF0It in "brand awareness" p.16, "listening" p.17 & 19, and in "downloaded apps" p.36) won't move the needle.
    1 Jul 2014, 06:38 PM Reply Like
  • MrMatt
    , contributor
    Comments (1348) | Send Message
     
    Songza does quite well in the "recommendations" of non tech publications.
    They have a nice set of playlists, and at that level, it was likely an aqui-hire.
    1 Jul 2014, 10:05 PM Reply Like
  • dgulick
    , contributor
    Comments (1576) | Send Message
     
    "aqui-hire"

     

    Agreed. Google undoubtedly wanted to bolster their playlists for their (struggling) Play Music All Access (or maybe just rename it!). And you can't argue about the price tag, $39M is very cheap, but really, not a bad deal for Songza owners/investors as it was unlikely to survive on its own.
    2 Jul 2014, 10:35 AM Reply Like
  • hksche2000
    , contributor
    Comments (938) | Send Message
     
    Reading the above blogs reminds you of "dot.com bubble" talk all over again. Do not open that Pandora's box, please, be mindful!
    1 Jul 2014, 08:03 PM Reply Like
  • ludus
    , contributor
    Comments (75) | Send Message
     
    15 million is what google spends on energy drinks in the break room. Who knows what value they saw in the company, maybe it had some talented employees or interesting code.
    1 Jul 2014, 08:04 PM Reply Like
  • manicdvln
    , contributor
    Comments (830) | Send Message
     
    They could easily incorporate the Songza into Google now.

     

    For instance you would say "Google play music for the moment"...

     

    And Google will play songs for the moment of the day after work or in transit...

     

    They could also use it to incorporate music selection.

     

    Like you listening to a song and you like it and you say "Google play more songs like this"....
    2 Jul 2014, 09:16 AM Reply Like
  • theo_rhetoric
    , contributor
    Comments (176) | Send Message
     
    Perhaps they just liked the name...
    2 Jul 2014, 07:16 AM Reply Like
  • jeborte
    , contributor
    Comments (20) | Send Message
     
    Regardless of what GOOG intends to do with the company, the point here is that major players are glamoring to achieve market share in the space - sooner or later it will come at the expense of P...and its over-valued stock price.
    2 Jul 2014, 09:24 AM Reply Like
  • dgulick
    , contributor
    Comments (1576) | Send Message
     
    "achieve market share in the space - sooner or later it will come at the expense of P"

     

    Actually all of these new entrants are growing the overall streaming market more than they are taking share from P. You are correct in that P will see a decline in *percent share* of it, but the overall pie is growing so fast it isn't an issue, as evidenced by P itself still growing plenty (listener usage up +28% YoY, revenue up +69% YoY). Their growth more than justifies P's stock price, in fact, by my calcs P is quite under-valued.

     

    What is happening (Apple iTR/Beats, Google/Songza, Spotify/Echo Nest, Cumulus/Rdio, Clear Channel/iHeartRadio, Amazon/Prime music) is an admission by the tech and radio giants that Pandora has struck gold and we are witnessing the prospectors rushing into the music streaming space to lay a claim. There will be many casualties, but the space is getting more and more validation with every one of these deals/moves, and Pandora is leading the way.
    2 Jul 2014, 11:14 AM Reply Like
  • jeborte
    , contributor
    Comments (20) | Send Message
     
    very well said, but i do disagree on the impact of competition on P's bottom line in the future.
    2 Jul 2014, 12:11 PM Reply Like
  • manicdvln
    , contributor
    Comments (830) | Send Message
     
    Dgulick shifts its argument whenever needed.

     

    He says no one is competition to pandora, then says none of competitors will be able to grow, then says Pandora is resilient against competition, then says the market is big enough for everyone to growth without stepping on each other. Then he poops of competition products and then praises Pandora for a like button. Then he says competitors will buy Pandora.

     

    Someone should make a wheel of fortune excuses and just spin for the excuse of the day.
    2 Jul 2014, 12:51 PM Reply Like
  • dgulick
    , contributor
    Comments (1576) | Send Message
     
    @jeborte,
    So far Pandora has maintained its ~3/4 market share of internet radio, looking back over the past year, reality is they are all growing:

     

    Streaming_Radio YoY_Usage_Growth
    Pandora +28%/yr
    Others Combined +29%/yr

     

    You are certainly right, competition will impact P's bottom line, its a question of what assumptions (growth, market saturation, international expansion, etc) is currently priced in, time will tell.
    2 Jul 2014, 01:44 PM Reply Like
  • stoj
    , contributor
    Comments (438) | Send Message
     
    Y, 15mil for Google is close to a non event
    2 Jul 2014, 10:07 AM Reply Like
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