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Google shows Apple how to buy a music service

Mike Elgan | July 8, 2014
Google bought Songza this week. The company makes a music app that competes with Pandora, Rdio, Spotify, Beats Music, iTunes Radio and other music services.

That's where the Beats Music comparison comes in. Beats Music is also human-curated — by celebrities, music critics, DJs and other music experts.

Why the Songza deal beats Beats

The backdrop to Apple's and Google's music service acquisitions is that both companies already have music services — iTunes Radio and Play Music, respectively.

It's likely that Google will simply blend in Songza's secret sauce with Play Music, and continue offering Play Music, monetizing it directly through subscriptions and possible advertising.

It's impossible to know what Apple is thinking on the Beats acquisition, but it seems likely to me that they'd like to re-invent the music business again (iTunes and 99-cent songs were the most disruptive event in the history of the music industry). I suspect they bought into Iovine's 360-deals vision for Beats Music.

Here's the problem. I believe Apple understands consumer electronics, software and music. But I don't believe they understand social networking. If they did, they never would have launched Ping, the company's failed music social network. Instead, they would have acquired Twitter at some point, where the Lady Gagas of the world already each have dozens of millions of followers.

In other words, for Beats Music to ever succeed, it would have to become, then succeed as, a social network. And it's too late for that.

Buying Beats for $3 billion was a big waste of money.

However, Google's purchase of Songza makes a lot of sense. The cost is trivially low by Silicon Valley standards, and the value is high.

Google has a better way to exploit music to sell things that are not music — advertising.

Google is also constructing a world where Google always knows what's going on with you and services up information and, yes, music based on your circumstances, location and activity. That's what Songza is all about.

Songza gives Google a nice boost to its existing music service, and in doing so it also gives a boost to Google Now, Google Search, Google Glass and probably to YouTube, Google+ and Android itself.

Songza makes Google stronger as a brand and better as a provider of Google services.

Beats Music, on the other hand, introduces a muddling second brand to Apple's mix, not to mention bad headphones and a music service that will probably never be able to do what it was launched to do.

That's why Google buying Songza is a way better acquisition than Apple buying Beats.


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